Reputation the most valuable intangible asset – so safeguard it, businesses told
PETALING JAYA: The reputational risk landscape has changed significantly over the last decade as risk profiles of businesses continue to evolve at an ever-faster pace across all industries, according to a report by Lloyd’s with collaboration with KPMG.
Titled “Safeguarding Reputation – Are You Prepared to Protect Your Reputation?”, the report highlights that corporate brand and reputation accounts for 25.3% of the market capitalisation of the world’s leading equity market indices, equating to US$16.77 trillion (RM68 trillion) of value for shareholders in 1Q’19.
The insurance firm found a heightened risk of adverse reputational threats faced by organisations, both internally and externally, as they continue to digitise their operations and customer engagement.
“Awareness of safeguarding reputation is critical and must form a considerable part of a business’ risk management strategy, to stay resilient, operationally and financially,” it said.
Lloyd offered that insurance could play a crucial part in such a role by providing reputational risk transfer solutions and developing bespoke products that would support multiple losses from legal costs to the loss of market value.
Furthermore, Covid-19 has also challenged the way in which many businesses think about how they protect their reputation, as it has caused widespread disruption and impacted organisations’ financial, commercial and operational resilience, increasing the likelihood of adverse reputational events.
It highlighted that organisations can proactively take steps to protect their reputation by enhancing their brand, preventing adverse events, as well as limiting damage and rebuilding reputation after an incident.
The insurance firm’s head of innovation Trevor Maynard pointed out that the Lloyd’s market already provides cover for reputational risks and is developing new products to help mitigate these risks and organisations’ exposure to them.
“Insurers have an opportunity to become true end-to-end reputational risk management partners, moving well beyond traditional risk indemnity and the usual crisis management support,” he said in a statement.
KPMG UK’s head of commercial & specialty insurance Paul Merrey commented that the reputational risks facing organisations are becoming increasingly complex, and a ‘one size fits all’ approach to protection simply won’t work.
“Insurers can play a key role in supporting businesses, though to be truly effective we expect new products will measure more nuanced triggers and be tailored to specific industries and companies’ needs,” he said.
“Just as cyber insurance has become a core offering to reflect a changed risk landscape, we anticipate that reputation products will become a staple within the insurance industry in the next five years.”