Crisis Management Coverage – What is it?
This is insurance coverage designed to help a business limit the negative impact of events on the business’ reputation. Crisis Management Coverage has previously been arranged for larger organisations, however small and medium-sized businesses should consider this too if their profitability is closely linked to maintaining a good reputation.
A company’s reputation is one of their most valuable of assets. It is difficult to value and often difficult to protect. It can take many years to establish the good reputation of a brand, but it can be destroyed in an instant.
Thanks to technology, news spreads quickly. Stories can go “viral” thanks to the internet via email, social media and other websites. This combined with the 24 hour news cycle provided by television networks and radio makes it very hard to prevent a bad news story about an organisation causing damage to your reputation.
"... a crisis can severely impact the ability of the
business to stay open... "
This cover has mainly been overlooked because the majority of businesses do not face threats to their reputation often. As negative publicity for them is rare, they are often unprepared for this if it occurs. For example, a notice of a health code violation or a food poisoning outbreak can easily spiral out of control. As a result a crisis can severely impact the ability of the business to stay open.
Many Insurance policies offering Crisis Management Coverage may narrowly define the types of events that are covered. Types of events that may be covered include workplace violence, assault, firearm use, food contamination, and workplace accidents. Events may also include credit card breaches or the hacking of a company’s computer network by an outside party. The coverage may be triggered as soon as news of the event is reported by the media, whether in regional forums or national forums. Coverage is usually set for a limited period of time, such as 60 days, after a crisis event occurs.
Policy coverage can include the following:
- Emergency and crisis preparation
- Paying for communications professionals to assist the policyholder in identifying and executing a strategy to limit further impact of the event in the media. For example, the business may need to employ a public relations professional.
- Loss of business income funds for a set period of time.
- Post-event issues, such as funeral arrangements or counselling for individuals who witnessed or were involved in the event.
"... expert preventative and incident management
advice is essential ..."
The financial and management implications of incidents and subsequent litigation means expert preventative and incident management advice is essential. It is so important that those responsible in managing a company can demonstrate that they are well-equipped to deal with unexpected crises or emergencies.
A crisis management solution should make sure there is operational preparedness, thereby minimising business interruption. It should also deal with any image damaging consequences as a result of crisis related loss, and subsequently strengthen your market position.
Some insurers can provide pre and post incident risk management offerings to help our clients reduce exposure to threats and minimise the impact of any incidents on their business operations.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Robert Cooper.