Risk Insider: Nir Kossovsky

Professional Suicide by Reputation Damage

By: | March 21, 2016 • 3 min read
Nir Kossovsky is the Chief Executive Officer of Steel City Re. He has been developing solutions for measuring, managing, monetizing, and transferring risks to intangible assets since 1997. He is also a published author, and can be reached at [email protected]

Reverend Dr. William Dolman, London’s coroner, set a legal precedent in the late 20th century by recognizing “death by cop” — known in the U.S. as “suicide by cop” — as a cause of death. The judgment applies to people who are already contemplating suicide and who exploit the trained reaction of police.

Having served earlier in my career as a Deputy Coroner in Los Angeles County, I believe the professional career analog, suicide by reputation damage, which exploits the trained reaction of stakeholders, may explain the curious behavior of Maria Sharapova.

When Sharapova announced earlier this month that she failed a drug test at the Australian Open, she would have been acutely aware of the impact of that disclosure on her economic returns.

Sharapova, who burst onto the tennis scene as a 17-year-old Wimbledon champion in 2004, is thought to be the world’s highest-paid female athlete thanks to her extensive business ventures and endorsement deals.

Forbes estimated her earnings at $29.5 million for 2015, with $23 million from off-the-court ventures.

“She is very savvy, she is a very smart businesswoman — and she understands return on investment,” Max Eisenbud, Sharapova’s agent, told the Financial Times in 2015.

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When Sharapova announced earlier this month that she failed a drug test at the Australian Open, she would have been acutely aware of the impact of that disclosure on her economic returns.

Therefore, she would have known that taking a recently banned drug before she lost to Serena Williams in the quarterfinals on Jan. 26 was a path to professional suicide by reputation damage.

Sharapova hasn’t played since, as she is recovering from a left-forearm injury.

Foreshadowing her professional suicide, Sharapova told the Financial Times last year, “Believe me, I will be very happy when I finish. There will be no regrets.”

“The people who want to commit suicide by cop are people who want to commit suicide but don’t have the nerve to pull the trigger themselves,” Terrebonne Parish, La. Sheriff Jerry Larpenter recently explained.

Perhaps the professional equivalent allows the perpetrator to fade away quickly without the chronic pain of diminishing performance.

Sharapova, with years of an unblemished image, could count on a quick professional death because the well-trained reactions of stakeholders to reputation damage.

Just as with corporate and board-level reputation events, if a celebrity “… has a squeaky clean image, the threshold for disgrace is lower than it would be for a hell raiser,” Chris Rackliffe from insurance agency Beazley explained recently to the Financial Times.

Reputation damage and disgrace with celebrities, corporations, and their boards is evidenced by stakeholder “dis-ing:” disloyal customers and fans; disengaged employees; distracted suppliers; distrustful creditors and sponsors; dismissive investors; and most worrisome, determined litigators and regulators.

Within days of her disclosure, sponsors Nike, Porsche, and Tag Heuer dropped Sharapova, although tennis racquet manufacturer Head stayed with her.

Several well-known insurers — including Ark Syndicate, Beazley, Hiscox, Kiln Tokio Marine, Markel, Munich Re, Steel City Re, Swiss Re, Talbot, and XL Catlin — now provide specialist cover, and underwrite celebrity and corporate reputation risk.

Just as restaurant fires represent end-of-career underwriting risks for the property markets, perhaps the lesson from Sharapova’s suicidal behavior is recognition of a potentially new underwriting risk for the celebrity, corporate, and D&O reputation risk markets.

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