Companies and their stakeholders are more focused than ever before on Environmental, Social and Governance (ESG) goals. The ESG performance of companies is now a crucial factor in many customers’ buying choices and investors’ decisions. Increasingly, activists and shareholder groups are scrutinising the extent to which companies live up to their ESG promises; getting this wrong can have severe reputational consequences. And this applies up and down the supply chain too; companies need to be sure that suppliers and third parties with whom they work are upholding ESG values.

Regulators are also turning their focus to ESG. For example, the European Union is in the process of passing a Corporate Sustainability Due Diligence Directive (CSDDD) that would, if enacted, require large companies operating in the EU to integrate ESG due diligence into all corporate policies – and update them every year. The spotlight is firmly on ESG and any slip-ups or failures could prove very costly to companies’ hard-earned reputations.

Reputational risk features highly on the agendas of the C-Suites of companies across all industry sectors. The widespread use of social media means that damaging information can be spread virtually instantly, across the world, making protecting reputation even more challenging for companies and brands. And the focus on ESG performance is adding another layer to this risk. We are working hard with clients to find ways to help them assess, manage, mitigate and transfer this evolving risk.

Prevention is better than cure

When we are working with clients to help them manage and transfer their reputational risks, we underscore the fact that it’s vital to have crisis management plans in place – and to rehearse and update these plans on a regular basis. If a potential issue arises, we urge clients to be positioned to get ahead of the situation before it escalates into a crisis. We perform a deep-dive into our clients’ operations, to identify potential issues and to put in place measures to prevent problems happening. Situations can change rapidly, often for reasons outside of our clients’ control.

S-RM, the global intelligence and cyber security consultancy that supports AXA XL’s reputational risk insurance product, monitors political and sanctions developments around the world. Monitoring services also provide intelligence to clients about other potential risks to reputation, such as human trafficking – a problem that increased dramatically during the worst of the COVID-19 pandemic. This monitoring keeps our clients up to speed with evolving situations and enables them to react quickly to potential threats. If a crisis does occur, our product – which is written on company paper out of London – is triggered by our client’s leadership team. The product funds expenses such as additional communications support, to help clients with their messaging and manage any threat to their reputation. The product provides both pre-event and post-event support, helping our clients to prevent, mitigate and manage risks to their reputation.

In a fast-changing world, with new threats every day and a heightened focus on ESG, we are working with our clients to keep abreast of this risk and to put in place the measures to help them manage it.

Reputational risk is continually evolving. The heightened focus on ESG, coupled with the fast-moving social media environment, means that companies across all industry sectors need to be aware of potential risks to their reputation and the ways those risks might change. Risk management, mitigation and transfer have an important role to play here both in prevention and as a financial backstop.

For reputational risk enquiries and to find out more about this product, please contact:

Oliver Doran
Divisional Director, Professional & Financial Risks
odoran@amwinsglobalrisks.com
020 7469 0164

David Taylor
Divisional Director, Professional & Financial Risks
dtaylor@amwinsglobalrisks.com
020 7469 0283