Jun 29, 2017 | By Nir Kossovsky | http://www.propertycasualty360.com
The potential for damage from corporate reputational crises is greater than ever, with market cap, sales, margins and profits all in danger. But in today’s heated social media environment — in which the public and key stakeholder groups seem all too ready to personalize their criticism and affix blame on individuals — CEOs are now personally at great risk.
Professional risk managers — whatever their positions — need to understand that traditional executive liability solutions are ineffective for these new risks. They need to be able to advise company leadership on new tools available to deter attacks and to insulate their clients when attacks do occur.

Reputational risk evolution

In the past, companies had to worry only about the direct financial consequences of workplace accidents, lawsuits or investigations, officers and directors felt secure with traditional D&O policies, and brand executives were skilled at deploying the full spectrum of the marketing tactics.

Now, the nature of reputational risk is different. A firestorm may ignite as the result of a factual incident — or it may simply be a case of “fake news” circulating on social media. The speed with which lasting damage can occur is daunting and reputations can be damaged — with consequential financial losses — rapidly and substantially.
A recent study by Steel City Re, which analyzes reputational risk and provides insurance products to protect companies and their leadership, found that financial losses related to reputational attacks have increased by over 400% in the past five years — a trend which continues to rise.
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