More than one-third of brokers in this month’s survey believe social media has pushed reputation risk up clients’ agendas, with nearly half investing in insurance cover to mitigate the risk
It is clear from this month’s survey that many UK firms are concerned about reputational risk. Some 75% of broker respondents revealed they are talking to their clients more about reputational risk now than in the past and nearly half said clients had requested insurance solutions.
And brokers point to the rise of social media and adverse publicity in the mainstream press as the two key sources that are driving the exposure. News of any incident involving a company in the UK can be quickly disseminated at the click of a mouse button.
One broker said the HSBC tax-avoidance scandal had prompted talks with financial services clients. “It’s high up the agenda, especially with the rise of people power via social media,” said another.
These discussions are not necessarily translating into demand for specific reputational cover, with some brokers unsure what products are available. Brokers are, however, increasingly being called on to offer risk advice when discussing other cover such as product recall.
“Adverse reputation is often triggered as a result of a separate cause, for example failure to deliver high quality service or products not meeting customer expectations,” one respondent said.
One-quarter of brokers had clients who had direct experience of an event with a reputational fallout in the past three years. These incidents ranged from allegations of criminal behaviour by a disgruntled ex-employee to the horse meat scandal.
A total of 46% of brokers said clients were investing more in managing reputational risk than in the past. This includes hiring internal and external PR consultants to monitor social media and encourage positive relationships with local media, more legal advice and buying insurance covers such as cyber liability and crisis containment insurance.
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