Increasingly brokers are expert risk advisers for individuals and businesses who need to sometimes be crisis advisers as well.
Brokers can help organizations plan for a crisis event and mitigate reputational damage. Crisis management is equal parts art and science – learning from the past, deploying strategic teams when needed, and authentically responding.
“In an economy where 70 to 80 percent of market value comes from hard-to-assess intangible assets such as brand equity, intellectual capital, and goodwill, organizations are especially vulnerable to anything that damages their reputations.” – Harvard Business Review
Insurance that covers the loss of revenue and profit attributed to a change in consumer perception of an organization’s brand because of a crisis is an element of reputational risk coverage, said Randy Nornes, executive VP with Aon Risk Solutions in Chicago to Business Insurance.
“The reality is if you’ve damaged a brand and someone paid you for the financial loss, you still have a damaged brand and there’s not enough insurance in the world to make you whole again because your business is basically damaged now,” Mr. Nornes said.
Aon Risk Solutions noted in its Global Risk Management Survey 2015 that a long list of well-known companies saw their reputations tarnished by unexpected incidents last year. “The risk to reputation and brand poses a major concern for organizations that generate over [$1 billion], since they are under greater media and public scrutiny due to their size and wider name recognition,” Aon said.
Property damage appeared on the top 10 risk list for the first time since 2007, indicating, Aon said, “a clear concern for increased and changing threats to key business facilities, and their potential impact on an organization’s ability to continue operations and achieve its business goals.”
A recent article on Aon’s One Brief states; in a crisis situation, well-informed decisions need to be made quickly, and these often do not allow for a lengthy fact-gathering process. Instead, decisions must be made on information known, however little there might be. Insurance brokers are well places to advise their clients on the importance of being prepared, have strategies in place to prepare their organizations for the unpredictable and to communicate effectively to customers and stakeholders during a crisis.