recent events prove that the worst injuries to company reputation are frequently self-inflicted. Yet, other than in Enron-style cases of outright fraud, this insurance pays out even if the insured has messed up. That seems odd. I can’t claim on my motor insurance if I leave my valuables in view on the back seat, and self-harm will invalidate my health policy.
The word self-inflicted it particularly apt, since clearly the recent reputation crises of Tepco, Toyota, BP etc etc area ll self-inflicted. I would also argue that while Sony's might not have been self-inflicted, they were certainlly made worse by Sony's internal culture.
But Hill's best point is that while crisis management insurance may pay for the best, or at least most expensive PR, advertising or advice, it really is only offering a false sense of security. Ultimately if you think you can "buy" reputation protection, you will continue to do stupid things that no amount of good PR or crisis managmeent can save you from. But Hill puts it so much more eloquently:
But beware of the comfort such hired hands offer. Brand and reputation are the sum of the investment of management time and energy in the invention, manufacture, marketing and distribution of successful products and services. Reputation management may sustain and promote your brand in good times and crisis management may help salvage some of it when they turn bad. But bosses who neglect the building blocks of their company’s success will find in a crisis that they have no reputation to defend, no matter how much insurance or advice they have bought.