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Tiger versus Dave: Case Study in Reputational Risk (Mis)management
By By Kevin Quinley CPCU © 2010

Dyanclaim for Claims Websites

Think you had a rough 2009?

Look at it this way – at least you’re not in David Letterman or Tiger Woods’ shoes!

Tiger Woods’ recent travails offer risk managers an instructive case study in managing brand and reputation of risk in the 21st century. Many of these lessons are placed in bold relief by contrasting Tiger Woods’ bimbo eruption with David Letterman's exercise in crisis and reputational brand management.

Let us look at four points of contrast between these two situations and try to distill within these some “takeaways” and lessons for risk managers.

#1. Proactive versus Reactive. Letterman broke the story himself, admitting on his show – on live TV – that he had had sex with various staffers over the years. He went public on his evening TV show. By contrast, Tiger Woods waited until the story erupted in tabloids and from various mistresses, whom reportedly he later paid to purchase their silence.

#2. Full disclosure versus drip-drip-drip. Letterman offered a complete disclosure with regard to the nature of his indiscretions, admitting on here that he had engaged in sexual activity with members of his staff. By contrast, Tiger Woods was vague with regard to whether he had committed any wrongdoing and later offered a vague reference to "transgressions," then mentioned infidelity.

#3. Full apology versus “whine and cheese.” Letterman offered from the get-go a complete mea culpa and apology for his actions. By contrast, Tiger Woods was belated in offering any kind of regret for his actions and blended his confession with complaints about his invasion of privacy. Letterman did not assert privacy rights or complain about media intrusions, even though he might have chafed at this.

#4. Real time versus “Read my website.” Letterman offered a disclosure and apology in person and on the air. By contrast, all of Tiger Woods’ communications regarding his activities have been via his website, after doubtlessly being drafted and redrafted by attorneys, publicists, handlers and spin doctors.
What can corporations – and their risk managers – learn from these contrasting examples? Here are six tips and action items:

• Be proactive in getting the bad news out there. Don’t wait for the #$%$ to hit the fan.

• Be specific about what went wrong. Apologizing for vague “transgressions” won’t cut it.

• Apologize and express heartfelt regret.

• Outline an action plan of steps you have undertaken or will undertake to FIX the problem that went awry.

• Do NOT try to “have your cake and eat it too” by complaining about intrusive media or whining about privacy rights.

• Consider buying reputational risk insurance coverage when it becomes available. The DeWitt Stern Group will begin selling reputational risk insurance in 2010. Such policies reimburse insureds for advertising expenses, lost sales and endorsement fees caused by a public relations crisis. The latter is defined as an unforeseen event or misbehavior that casts a pall over a company. With the heightened awareness of brand identity and reputational risks, it is possible that an increasing number of niche insurance products made arise to address this type of loss

Finally, let me wish all a Happy New Year as I apologize for any “transgressions” I have committed during 2009 …

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