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Reputational Risk More Prevalent Than Ever Before

By February 15, 2013February 23rd, 2021Business Insurance, New Jersey Insurance

A recent study suggests there is an 80% chance that a company will lose at least 20% of its equity value in a single month due to reputational damage.*

  • Customers are able to rapidly communicate their bad experiences through the internet and social media outlets, such as Facebook and Twitter.
  • A poor service review or an adverse experience with a product has the ability to reach thousands, known as going viral.
  • Insurance companies are beginning to include crisis management, expense reimbursement, and other potential PR reimbursements that can be added into certain policies.
  • Since coverage is fairly new it’s important that coverage forms are thoroughly analyzed.

What can a business do to prevent and respond?

  • Identify and assess areas where a threat to reputation can occur. Products liability is one area of concern, as well as, poor customer service experiences. Another area might be disgruntled and unhappy employees.
  • Implement a Reputational Risk Management plan. An effective plan will encompass prevention measures and contemplate effective responses during crisis.
  • Monitor the effectiveness of the plan and update it for changes within the organization. The plan must at a minimum equip the company to communicate the corrective action taken, but also not exacerbate a situation and create additional liabilities.

The result, it’s a balancing act and many companies are not prepared to effectively deal with reputational risk. That’s why it’s important to have a risk management professional that can help implement a plan toward prevention and response. At Rue, our Risk Management professionals can help your company get in front of this very real business threat.

*Source:, October 7, 2012. Study Prepared by Oxford Metrica and sponsored by Aon P.L.C.

Scott Harrigan

About Scott Harrigan

Scott started his career in insurance in 1988 and joined Rue Insurance in 2004 as a Marketing Specialist focusing on creating effective risk financing and risk transfer programs for companies and non-profit organizations. In addition to this he is a member of the Rue Insurance educational team that provides ongoing professional development in critical insurance concepts and programs to Rue employees. About Scott | More Posts by Scott