There’s not much in the world that insurance companies won’t agree to cover for the right price.
Insurers are reportedly on the hook should harm come to Dolly Parton’s bosoms ($300,000 per), Rolling Stone Keith Richard’s middle finger ($1.6 million) or supermodel Heidi Klum’s legs ($1.2 million for the right; $1.0 million for the left, after depreciation for a small scar).
Factoids like these make me seriously question whether the insurance industry has its priorities straight. I say this because by far the most valuable and damage-prone asset an organization has to protect—its reputation—is, ironically, the hardest to insure. And by hardest, I mean virtually impossible. At least in the traditional sense.
The reason is simple. Insurance companies prefer to cover risks that have price tags people can objectively agree on—like the cost to rebuild a 30,000-square-foot warehouse destroyed by fire. Putting a price on reputation is far more complicated. The sheer number of variables requires calculations so complex that insurers have yet to come up with, much less agree on, how to do it. Not surprisingly, it appears as though the handful of carriers that do offer reputation insurance are hedging their bets by pricing coverage beyond the reach of all but large multinational companies.
Until insurance companies figure it all out, here are five ways to insure your organization’s reputation without paying a penny more in premiums.
Think Like an Insurer
Where insurance is concerned, past performance is indicative of future results. The first thing an insurance company does when deciding whether to issue a policy is review the applicant’s claims history. The more losses insurers had to pony up for in the past, the more likely the insured is to have claims in the future. Organizations whose track records suggest cavalier attitudes toward risk are charged higher premiums than those that work to actively manage them and prevent losses.
A simple way to shrink your company’s exposure to future reputational “claims” is to start thinking like an insurer. Anything an organization does to make itself a more attractive (that is less risky) candidate for insurance helps reduce its odds of being blindsided by an expensive, reputation-damaging crisis down the road.
Begin by going after low-hanging risks that can be neutralized quickly and easily, like scouring websites, marketing materials, policy manuals, employee handbooks and boilerplate customer communications for language, images and policies that are no longer in sync with society’s expectations. Conducting a workplace audit to identify and eliminate potential safety hazards can head off accidents and the hefty regulatory penalties and negative publicity they can bring. And with remote network access the new norm, reviewing and updating IT policies and security safeguards on a regular basis can reduce the threat of damaged trust from a cyberattack or privacy breach.
Update Your Alarm System
There’s a reason insurance companies give discounts for alarm systems and fire sprinklers. The sooner an insured detects a potential problem, the greater its chances of containing the damage. Early detection is a win-win—the insurer avoids a claim (or at least gets to write a smaller check), while the company avoids the potential disruption and lost revenue of a full-blown catastrophe.
Using technology to monitor, analyze and detect sudden shifts in the volume, tone and sources of online chatter is a good first layer of protection, but artificial intelligence is far from perfect. When it comes to picking up the earliest warning signs of trouble, there’s no substitute for the eyes and ears of a motivated and empowered workforce.
Give employees multiple channels for reporting suspected ethical breaches, toxic workplace behavior, regulatory non-compliance, financial malfeasance, unsafe working conditions and other issues that put people and reputation in danger. A third-party hotline administered and answered by trained personnel does more than help reassure nervous callers of their anonymity. It ensures that calls are handled consistently and with appropriate sensitivity, and that all the details needed to properly investigate a report or allegation are captured and shared appropriately. Remind employees regularly that looking out for their colleagues and protecting the organization’s reputation are everyone’s responsibility, and of the mechanisms that are in place for doing so.
Build Your Preferred Provider Network
Health insurers often require members to select a primary care physician to serve as their first point of contact for care. Having one doctor who knows you and your entire medical history coordinate your care with an extended network of specialists who have access to the same information makes sense. In addition to being more efficient, it eliminates the kinds of risks that can creep in when patients are treated and prescribed medication for the same conditions by multiple doctors who don’t talk to each other.
Your internal crisis team is a lot like your medical provider network. Team members know the “patient” inside and out. They have clearly defined roles spanning a broad range of knowledge and experience. And they have the training they need to work effectively together without duplicating efforts or stepping on each other’s toes.
Just like healthcare, there will be times when managing a crisis calls for specialized expertise from outside the company. Identifying and negotiating agreements with reputation management firms, legal specialists, cybersecurity experts, forensic accountants, medical advisers or any of the other experts an organization might need to call on is not something to be doing when all hell is already breaking loose. Getting this extended network of crisis “preferred providers” on board, up to speed on the company and programmed into speed-dial before they are needed will add to their value and save precious hours when the next crisis rolls around.
Pick up a Rider
Ask your insurance broker or risk management consultant whether any of your organization’s current insurance carriers offer an optional crisis management “rider.” This extra-cost addition to a policy covers the expense of hiring an outside crisis and reputation management firm to guide your organization through the storm, up to an agreed amount, in the event of a covered loss.
Crisis riders frequently come with a list of pre-approved reputation and crisis management firms chosen by the insurance company. However, the insurer’s “preferred providers” are not the only options. The insured generally has the final say on who it wants to work with, subject to the company’s approval. So be sure to let your broker and carrier know that you already have a trusted reputation adviser so they can do their vetting and get your preferred provider pre-approved and set up in their systems before you have a claim.
Keep Up with the Premiums
Funny thing about insurance—if you don’t keep paying the premiums, the protection vanishes faster than cushy toilet paper in a pandemic.
Staying on top of evolving risks and best practices and maintaining good reputation hygiene habits day in and day out are the reputational equivalents of keeping your insurance policy paid up. Let things slide and the accumulated protection that took months and years to build goes out the window.
The stronger your organization’s reputation is, the less likely it is to suffer reputational damage when something goes wrong.
To put it another way, a solid reputation is its own insurance.
So, get those regular risk check-ups on the calendar now and don’t put them off. Work on building solid reputation habits throughout your organization. Put your company on a sound crisis exercise regimen and a diet rich in nutritious content. And pay close attention to emotional health—your own and the emotional well-being of those around you.
And one more thing. Take extra care when programming the “crisis” button on your speed-dial. Better yet, just give us a call.
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