Tag Archives: Steel City Re

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Exxon versus BP: Managing Reputation Risk in the Era of ESG

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Nir Kossovsky and Denise Williamee of Steel City Re, an AC Client, publish a piece in Hart Energy about the different reputational risks oil and gas companies face as they chase ESG goals.

Compare BP’s statements and actions to those of Exxon Mobil Corp., whose pledges have been more modest and measured—cutting emissions from its oil and gas production 15%-20%, all under their control, by 2025 and ending routine flaring of methane from its oil-and-gas operations by the end of 2030. The company seems to be taking an approach that focuses on its central mission while promising what it can reasonably hope to accomplish on the environment front. Perhaps they are bearing in mind the old adage that it is better to under promise and over deliver.

Striving for environmental purity may be noble, but it can be materially damaging when companies and their leadership set lofty goals they cannot attain. These reputational issues are playing out in both courts of public opinion and courts of law, where derivative lawsuits naming board members and citing reputational issues are now being upheld. In fact, federal securities lawsuit filings alleging reputation harm are up 60% over last year in the third year of a rising trend.

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Will Political Polarization Stop Companies From Supporting Social Causes?

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Insight from the CEO of Steel City Re, an AC Client, was featured in the Wall Street Journal.

When it comes to taking a stance on either race or politics more generally, authenticity and consistency are key. That means going beyond one-off marketing campaigns and social media posts meant to bolster a brand’s image and signaling a deeper organizational commitment to principles-based causes by investing real time and money, brand and reputation analysts say.

Taking a stance on any social issue should start with a thorough evaluation of the company’s stakeholders, according to Nir Kossovsky, chief executive of Steel City Re LLC, a reputation risk management and insurance company.

Companies traditionally have divided responsibility for different stakeholders among different corporate functions—the human-resources department, for instance, manages employees, while marketing handles customers, general counsel or compliance officers deal with regulators, and so on.

Companies need someone who can gather information about different stakeholders and strategically manage the reputational risks associated with each, Mr. Kossovsky said.

“If you know what they want, you have a choice: make operations conform to their expectations or invest resources in managing their expectations to something you can meaningfully reach,” he said.

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AC Client Steel City Re: Growing Value by Stewarding Company Reputation

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In an article for CFO Dive, the CEO of AC client Steel City Re writes about the need for CFOs to take a hands-on approach to managing their company’s reputational value, especially in the COVID-19 era. Doing so sends market signals that lead to improved equity and debt pricing.

CFOs have been responding to the slowdown by talking about cash flow, net earnings, and how long of a shutdown they can handle. What they should be talking about is fear.

Consumers reined in first quarter spending faster than many analysis predicted. Households, apparently, engaged in social distancing well ahead of stay-at-home orders.

As a result, consumer spending-based projections were flawed, and will remain flawed if financial models fail to consider the role of behaviors like fear in driving the economy. In their next round of earnings calls, CFOs might consider leading a different discussion —​ on behavioral and informational economics.

In the next quarter, fear, anger and disappointment management will be the x-factor shaping companies’ equity and debt prices. That x-factor has a name: reputation risk management.

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