"Image crises can have a long term adverse effect on the value of a company"

A soft factor or a real asset? What does a good reputation mean for a company?

Joachim Albers: Nowadays, image, brand strength and customer confidence play a huge role in a company's success, particularly in the consumer goods sector. On the other hand, a company's capital assets suffer quickly if its image is tarnished. A company loses customers, its revenue is reduced, the share price falls, its reputation as an attractive employer suffers. This is how an image crisis can have an adverse effect on a company's financial success in the long term. Consequently, in many companies today, reputation management is no longer just a job for the communications department, but is also attracting more and more attention at senior management levels as a core task for everyone


What kinds of incident can damage a company's reputation?

The list is long and it's constantly getting longer as society's moral standards change. Corruption, defective products, advertising mishaps, suppliers who use child labor, discrimination, management scandals, bad emergency management in the event of accidents - these things can all build up to a crisis. The important thing is that a company reacts professionally, appropriately and honestly, and uses this to try and contain the crisis. And this is an area in which many companies require competent support.


But most companies have their own PR professionals, don't they?

That's correct. But luckily, the everyday business of most firms isn't governed by global waves of anger on the Internet or media law disputes. And a global PR network is far from par for the course at many companies. Because of this, a company needs specialized advisors in crisis situations who know how to judge whether or not you need to react to a storm right away, whether it's better just to let it pass of its own accord, or, for instance, how best to react to accusations made in a country's local media. We cover the costs of this sort of professional advice as part of this new insurance cover.

Joachim Albers
Joachim Albers: "Nowadays, image, brand strength and customer confidence play a huge role in a company's success, particularly in the consumer goods sector"
Was können Unternehmen selbst tun, um ihren guten Ruf zu schützen?

Reputation management is no longer just a job for the communications department

Do you also cover the costs of potential financial damage?

When it comes to protecting a reputation, there are two possible options from an insurance point of view. Insurers could provide balance sheet protection and reimburse revenue losses. But how would you go about measuring the damage? It's very difficult. What ultimately appears as damage in the company balance sheet depends on a variety of factors and certainly can't be represented in a simple synopsis. Besides, in large industrial companies, the financial losses can soon run into the billions; just think of BP and the oil disaster in the Gulf of Mexico. This pushes insurance to its limits. Because of this, we decided on the second option, which is based on prevention and assistance. We want to help companies use professional crisis management to ensure that financial damage doesn't occur in the first place.


What can companies do themselves to protect their good reputation?

A positive image isn't down to luck or chance, but the result of many years of work. This means that it's a case of avoiding risks to your reputation in the first place by putting the necessary compliance structure in place in the company. A company's external image should be actively shaped - and analyzed - by the communications and marketing departments. Continuous media monitoring is now standard in most companies, and this should be supplemented with regular surveys of employees, customers and the public. By doing this, a company gets a reliable picture of which aspects of its corporate policy are perceived critically by its stakeholders, and can prepare itself for unusal situations in a target-oriented manner. It's also important to have procedures and responsibilities for a crisis scenario already established beforehand, and in an ideal world, to test these regularly using simulations.

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer:

Heidi Polke-Markmann
Allianz Global Corporate & Specialty
Phone +49.89.3800-14303
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