Lloyd’s report highlights heightened reputational risk and opportunity for insurers
Rising reputational risk represents an opportunity for insurers and brokers to move beyond traditional risk indemnity/crisis management and develop new bespoke solutions to help mitigate these risks, according to a new report by Lloyd's.
The specialist re/insurance market has teamed up with KPMG on a new report that looks at the role of the global re/insurance industry in providing risk transfer solutions and adapting to the increasingly complex reputational risk landscape.
The report states that risk profiles of businesses continue to evolve faster than ever and that corporate brand and reputation accounts for 25.3 percent of the market capitalisation of the world’s leading equity market indices.
It calls for businesses to stay resilient, and ensure that safeguarding reputation is a critical part of their risk management strategy.
The report also notes the crucial role insurance can play in providing reputational risk transfer solutions and developing bespoke products that would support multiple losses from legal costs to the loss of market value.
The pandemic has caused widespread disruption and impacted organisations’ financial, commercial and operational resilience, increasing the likelihood of adverse reputational events.
The report explains how 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.
Trevor Maynard, Lloyd's head of innovation, said: “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. There are huge growth opportunities for insurers and brokers to help organisations transform their reputation management.”
Paul Merrey, head of commercial & specialty insurance at KPMG UK, further explained: “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.
"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.”
