Reputation insurance gaining traction

Emboldened company stakeholders and regulators scrutinising the disclosure and accountability of companies making environmental, social, and corporate governance (ESG)-related policy commitments are gaining traction—leading to more interest in insurance designed to cover such risks.

Reputation risk insurance, quietly on the scene for over 20 years, is gaining a boost from the dynamics at work, says the chief executive officer of parametric reputation risk insurer Steel City Re, Nir Kossovsky (pictured).

The truly explosive factor—rising risk awareness—is not born of corporate culture or business logic; it’s rooted in outright fear. “Boards have become acutely aware of the personal threats to their own integrity and viability,” Kossovsky said.

The tell-tale signs of “acute” fear: compliance officers and general counsel are taking over from risk officers. “The issue has grown in importance when it falls into counsel’s lap.”

Stakeholder activism built it. ESG has pushed firms into uncounted commitments, be it net zero carbon emissions by 2050, or nearer-term diversity and inclusion (D&I) targets. History can judge if targets are hit, but any stakeholder can turn litigant to claim value lost.

“The expectations and the value that accrues from a credible plan—that is reputation,” Kossovsky said.