A company’s reputation is widely considered its most valuable asset. Defining “reputation” and determining what goes into creating or damaging a business’s reputation isn’t a simple task. Reputation may be seen as one of those intangible things that can make or break a company. However, reputation (and reputational damage) can be measured using a number of metrics, from sales to customer and employee reviews to stock price and more.
One thing all businesses realize (or should) is that their reputation can take a serious hit nearly immediately. News of a negative post from an influential person, an executive (or any employee) who says or does something egregious or an ad that’s perceived as racist, political (on any side of the political spectrum) or tone deaf can spread around the world within hours.
A company’s reputation can also suffer if it experiences a data breach that puts customer information at risk or if a problem within the company, like widespread sexual harassment allegations, becomes public.
Choosing the right policy
There are corporate reputation insurance policies that can help minimize financial losses caused by financial harm. Those are more expensive than a reputational risk add-on to a broader company insurance policy. These come in various forms – including business owner’s liability insurance, crisis management insurance and cyber threat insurance.
As with any type of insurance, it’s best if it’s never needed. That’s why it’s critical for companies to carefully manage their reputation. Public relations (PR) professionals are among those who can help do that. They can also move quickly to stem the bleeding if a PR crisis occurs. Crisis management professionals can also be called in.
When a company is choosing a policy to help protect it from the harm caused by reputational damage, it’s critical to make sure the policy fits its needs and will offer a buffer from the financial fallout of reputational damage. When choosing a policy – and certainly if the insurer isn’t providing the expected coverage when needed – it’s wise to have experienced legal guidance.