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“What is in a name? Would a Rose by any other name just smell as Nice?”William Shakespeare.

What we do as individuals or organizations creates our reputation, and people will do just about anything to protect their reputation, that is who they are and what defines them. This is because people value what they are known for and defines themselves by their reputation.

In a work environment, the best way to make your employees improve their performance exponentially without breaking a sweat is to give them a reputation to live up to. People do their best if they are convinced that the positive picture you have painted about them is who they are, and the opposite is also true.

The old Adage Goes” It takes a lifetime to build a business, but just minutes to bring it to an end”. A lot of factors can bring about the downfall of a business, including unethical business practices, corruption, poor management etc. However one factor that would certainly bring about the downfall of an organizational and is not receiving the attention it deserves in most organizations is reputational damage.

According to the Concise Oxford Dictionary, reputation is the belief or opinions that are generally held about someone or something. In the business World, it would translate to beliefs or opinions generally held about an organization.

Simply speaking, a working definition of reputation is the sum of impressions held by a company's stakeholders.

Whenever we interact with our people, we create an impression on them. The fact is that whenever we are serving others, we are branding ourselves. If it is a good mark, they will remember us when an opportunity arises. Our customers are our best marketers. Once they leave us, they travel far and wide, to either market our service or warn others against us.

Some of the greatest connections business or companies make comes from an interaction with a customer. People do not forget what we made them feel.

One notable thing about reputation is that good reputation takes a long time and complex activities to build and is usually considered to be a component of the identity of an organization or firm. Its influence can be felt in competitive settings like markets, firms, organizations, institutions and even communities.

Building a good reputation requires careful planning and a great deal of long term investments. Perhaps the greatest skills of professional managers are their ability to create, maintain, enhance and protect the reputations of their organizations.

The reputation of an organization depends on several factors. The prime factor being the reputation already created. Other factors include the reputation of an individual e.g. The CEO; or Team of experts, Brand, Industry and even the country in which the organization is domiciled.

The key point in reputation is not what the leadership insists but what others perceive it to be. In other words, reputation is in the "eyes of the beholder". For a company, its reputation is how esteemed it is in the eyes of its employees, customers, investors, prospective clients, competitors, market analysts, regulators etc.


Reputation forms a very huge capital base for an organization and in accounting terminology; it can be referred to as goodwill. A positive reputation will secure a company or organisation long-term competitive advantages.

As part of an Organization’s Capital, it has to be accumulated, managed, and traded in for trust. It will accord the organization legitimization, visibility and social recognition.

A premium price for goods and services offered, higher customer loyalty, a stronger willingness among shareholders to hold on to shares in times of crisis, or a stronger readiness to invest in the company's stock are positive consequences of having a good reputation. As such, reputation is one of the most valuable forms of "capital" of a company. It is a strategic asset and advantage for the company.

"Delivering functional and social expectations of the public on the one hand and managing to build a unique identity on the other hand creates trust and this trust builds the informal framework of a company.

Given the importance companies attach to reputation, many businesses have public relations departments dedicated to managing their reputation. The public relations industry is growing due to the demand for companies to build corporate credibility and reputation. In addition, many public relations firms describe their expertise in terms of reputation management.

Not only must a company relate constructively to customers, suppliers, and dealers, it must also relate to a large number of interested publics. A public is any group that has an actual or potential interest in or impact on a company’s ability to achieve its objectives. Public Relations (PR) involves variety of programmes designed to promote or protect a company’s image or its individual products.

The wise company takes concrete steps to manage successful relations with its key publics. The public Relations department, amongst other things, monitors the attitudes of the organizations publics and distributes information and communications to build goodwill. The best PR departments spend time counseling top management to adopt positive programs and to eliminate questionable practices so that negative publicity does not rise in the first place.


Concern over reputation is sometimes considered a human fault, exaggerated in importance due to the fragile nature of the human ego. William Shakespeare provides the following insights from Othello:

Cassio: Reputation, reputation, reputation! O! I have lost my reputation. I have lost the immortal part of myself, and what remains is bestial. My reputation, Iago, my reputation!

Iago: As I am an honest man, I thought you had received some bodily wound; there is more offence in that than in reputation. Reputation is an idle and most false imposition; oft got without merit, and lost without deserving: you have lost no reputation at all, unless you repute yourself such a loser.

Reputational Damage these days can bring down the high and mighty corporate very quickly, and ultimately, any business closing will devastate those involved.

Developments like social media, the internet and the 24/7 news cycle, which have resulted in news and rumours reaching all corners of the Earth in minutes, making management and damage control extremely difficult, if not totally impossible. The convergence of globalization, instantaneous news and online citizen journalism magnifies any corporate wrongdoing or misstep. With our growing appetite for media, and the urge in online networking and reviewing, reputation is everything. Barely a day goes without some company facing new assaults on its reputation.

Incidents which damage a company's reputation for honesty or safety may cause serious damage to finances. For example, in 1999 Coca-Cola lost $60 million (by its own estimate) after schoolchildren reported suffering from symptoms like headaches, nausea and shivering after drinking its products. There are many more examples of that nature experienced all over the world.

The danger with reputational damage is that it can be the smallest event, which can be easily ignored, that causes the severest damage and anyone can be affected.

According to one study, 84% of responding business leaders saw the greatest reputation threat online to companies as negative media coverage. The next two greatest threats are customer complaints in the media or on grievance sites online (71%) and negative word of mouth (54%). This negative word of mouth can be from dissatisfied customers and employees as well.

The Insurance Industry for example has for a long time suffered because of “Word of Mouth”. We always hear the saying that Insurers are dishonest people, who are quick to collect premiums, but do not honor their part of the bargain when claims arise. Other jokes about the industry is that Insurers offer their clients umbrellas when the sun is shining but take it back immediately it begins to rain; i.e. when they need it most.

Defamation damaging the business can come from many directions; an employee can bad mouth you to competitors, an unhappy customer may post a bad review of the business online; or a competitor that makes a direct or defamatory claim in it as marketing.

To counter such threats, companies should know their rights and understand what can be considered as defamation. Defamation is based on fact and not opinion. An unhappy customer can post a review of a restaurant saying they didn’t like the food-that is an opinion. But if they claim their food was uncooked when it was, that is a false statement of fact and can be considered defamation, because it could harm their reputation.


Following recent surveys conducted, it has emerged that reputation damage is one of the risks that is very difficult to manage under Enterprise Risk Management. According to the same survey, it emerged that reputation is a company’s greatest asset, and that reputational risk is the most difficult individual risk category to manage.

Several factors have been cited for making this the most difficult risk to deal with.

One of the factors is globalization; which has increased the interdependency of risks worldwide. The problem is further exacerbated by factors such as lack of risk management tools and processes; insufficient budget and lack of management time and human resources and skills.

The ability for executive stakeholders to reassure external interests, including shareholders, investors and regulators that the organization has completed a thorough risk evaluation is becoming increasingly important.

In an attempt to control or minimize the damage, once you know or suspects that the business may be at risk, taking action promptly is key. An example, a company knew its system had been compromised but was unsure of whether customer data had been taken or would be used. It was faced with warning all it customers of a possible data breach. However as a precaution, it reset all its customer passwords, and communicated everything they were doing to the customers. The company successfully moved on from the incident with little-long term damage to its reputation.

Communication is key in such situations and Insurers have a lot of lesson to learn from such cases. They (insurers) are accused of never communicating effectively with their clients. The danger with lack of communication is that people become fed up with delays and with feeling of being un- appreciated. As a result, they post derogatory comments on face book or on twitter and suddenly the firm has a reputational issue to deal with. Acting swiftly to respond to any situation from not responding to mail or non-payment of claims to data breach is essential to limit reputational damage and potential litigation.

There is no doubt that internet poses a serious threat to reputation as cited above and it is important that we protect our data. The internet and social media are rife with heart rendering stories. . There are stories of criminal gangs stealing internet user names and passwords, running into billions, through data pilfered from the websites. This poses a dangerous situation as damaging information and messages can be sent out.

There are also organizations or groupings created with the aim of creating mayhem in the cyber space. Recently, News Headlines in some parts of the World Read “The Social Media was down worldwide for about an hour after suspected Cyber Attack by the nebulous hacking group, the Lizard Squad. They knocked off face book and Instagram across the World at 1am. The two social sites with a total of 1.5 billion users appeared with error messages”. One such organization is the lizard Squad.

Lizard Squad is a black hat hacking group, known for their claims of distributed denial-of-service attacks to disrupt services related to gaming.


Lizard Group thrives on disruptive ability and intent to scare. In august 2014, the group tweeted that explosives were aboard an American Airlines flight, prompting an emergency landing.

These groups can infiltrate any body’s website and use it to damage an organizations reputation.

In case of such an occurrence, the website owners will have the task of informing the authorities about such breaches and secondly the public has to be reassured– an expensive and potentially reputation damaging affair. Failure to act will not only put them in a breach of regulations, but also severely impact an otherwise unblemished reputation if the public looses faith in their security.


Reputational risk is becoming an increasing part of cyber risk environment as business realize that while cyber may have operational benefits, in the long-term reputational damage that may cost the business more can easily occur.

Insurers and brokers have a role to play in such reputational risks and in some cases, Insurance Cover is available.

What insurers need to know to achieve information security and mitigate risk

Like other sectors, the insurance industry is under constant attack as cyber threats become more pervasive, persistent and sophisticated. Consequently, insurers must develop systems and processes to protect against data breaches and the loss of intellectual property.

Intellectual property represents our ideas; how you have grown you have implemented them and grown your business. It includes your brand, (log, strap line, visual identity), the way you position your business with language, not just advertising lines, but the content s of your website. It also needs to be protected.

Cyber Risks Insurance is developing to meet these news threats.

To be able to effectively insure these risks, there is need for Insurance organizations to be able to identify and evaluate the cyber risks scenarios they face, analyse their insurability and risk tolerance and then model their insurable and non-insurable losses. With thousands of cyber attacks taking place daily against organizations around the world, it is clear that for certain cybercrime groups, hacking is now the most effective means of achieving their commercial or ideological gain.

But unlike companies in other industries, insurers must gain deeper understanding of cyber risks if they are to underwrite, price and service cyber liability policies. Such policies are evolving to include not just technology providers, but all organizations that collect, store and process data from their customers.

Insurers can do the following in attempt to contain the situation, using two primary dimensions: cyber security and risk management.

  1. Highlight the essential elements for cyber security, including:   Proactive security strategies to address and manage proliferating cyber threats Data integrity – the ability to independently prove what happened in a digital infrastructure, determine the impact of a security incident and distribute the liability for a data breach Security challenges relative to big data and the need for robust analytics capabilities to address them. 
  2. Focuses on the risk aspects of cyber liability insurance, including:  The correlation of cyber risks to enterprise risk management, including risk modeling and transfer Exposure related to data breaches, but also risks associated with supply chains, emerging digital technologies and rapid-growth markets The impact of cyber risks on reinsurers The emergence of cyber captive insurance Cyber liability regulation and rating 
  3. To mitigate cyber risks, insurers must:  Accept that all insured infrastructure is a target, with the highest value assets the most frequent targets Remain alert to changing trends and emerging threats within the market and ensuring that policy terms and conditions do not increase exposure Consider a cyber risk center of excellence approach that extends across customer, risk-centric and financial activities. 
  4. The way forward for insurers:   There are both short/near-term and long-term actions for insurance companies seeking to establish cyber security. These include:- Developing and implementing a long-term, enterprise-wide security program, Investing in cyber security and working to demonstrate the value of those investments Examine keyless signature infrastructure as a means to enable audit ability Implement solutions to monitor and report on the effectiveness of security programs Embrace a “management by data analytics” approach for risk assessment.  

In conclusion, it is important to appreciate that reputation damage emanates from the following three major causes:-

  1. Employee Behavior
  2. Operational Failures
  3. Environmental damage


Initially it has been generally assumed that hackers were the greatest security risk, but incidents indicate that those closest to the organizations can cause the greatest damage, whether through human error (loss of laptops and USB sticks are common), negligence or misconduct.

Employee misconduct can be cited in several cases. In one case an employee stole the payroll data of the employer and posted it on a website. Insurance employees have not been left out as some have been reportedly arrested for selling customer claims information to claims companies, while private medical reports have been used outside the company’s premises.


The way an organization directs its Machines and Equipments during an operation will greatly affect its reputation. For example a passenger transporter who is reckless and is always involved in fatal accidents will lose it customer base and will eventually close its business.

The obvious potential for reputational damage if these figures played out would be huge. Insurers and brokers have a role to play in such operational risks, and Insurance cover is available in some cases.

The Small and Medium businesses are not left behind. The landscape for the SME’s is changing, and so is the mode of their doing business. The structure and risks profiles are also changing, and their customers are becoming more complex. Difficult times have forced many of them to diversify, and the advent of new markets and technologies has brought an unprecedented pace of change.

The Insurance market will need to respond and identify risks facing these changing businesses.


A heightened level of public awareness around environmental issues and ongoing developments in regulation mean that businesses are increasingly responsible for environmental damage. The impact of environmental issues and the liabilities arising from them can be large and complicated.

Damage or perceived damage to the environment in today’s world will impact badly on an organization’s reputation.

Sparked by the green revolution, new rules /laws are being enacted all over the World and these have changed the environmental damage landscape massively. In most cases, it is no longer enough to stop the damage and companies face stringent conditions around reparation and compensation.

Most importantly, from a reputational damage perspective, companies are obliged to publicly report on their remedial actions and to ensure the wider community is properly compensated. This can be a reputational Minefield for the companies, not only faced with an operational crisis but also with the task of compensating the community at large.


Reputation recovery is a long and arduous path. Research has found that it takes approximately 3. 5 years to fully recover reputation once damaged, and it will take the company seven years to progress from good to great. As a consequence, public relations become handy and must be used in order to establish long lasting relationships with the stakeholders, which will enhance the reputation of the company. Public Relations are also an important tool when dealing with damage control and loss minimization after the occurrence.



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