Trump poses reputation threat to D&Os: CEO

Trump poses reputation threat to D&Os: CEO

Trump poses reputation threat to D&Os: CEO In just one week, President Trump told America that pharmaceutical companies were “getting away with murder,” sending their stocks plummeting before meeting with industry CEOs and their stocks rebounding.
Within the same timeframe, Trump said he’d eliminate 75% to 80% of FDA regulations to bring pharma manufacturing jobs back to the US.

All of this may be music to the ears of Trump supporters, but for directors and officers (D&Os) this type of talk creates risk, according to a reputation insurer.

“I believe the Trump administration creates risk for D&Os by these unpredictable behaviours,” said Nir Kossovsky, CEO of Steel City Re.

“We (Steel City Re) have been approached through brokers by three different industry groups representing the largest firms who have collectively deemed that they’re potentially at risk for being forced to do something to meet the expectations of stakeholders.”

Kossovsky listed the lines of business he thought were most vulnerable to a Trump tirade as being heavy manufacturing, heavy machinery, industrial services, energy, minerals, consumer manufacturing and consumer durables.

“He puts them at risk by creating expectations that they may not be able to fulfil… the nature of a reputation risk is the gap between expectation and an attainable reality,” Kossovsky said.

 “A crisis in the current environment is imminent, I don’t think there’s a D&O on the face of the planet right now who could say ‘I have nothing to worry about, I don’t need to be proactive, I don’t need to reinforce my own credibility’.”

Dampening the credibility, and therefore the effect, of Trump and the White House is one method of risk mitigation Kossovsky recommended.

Creating a collective voice advocating a dissenting narrative in the form of “he (Trump) says this but what he really means is that,” or “you know when he says this he doesn’t mean it,” were some of the counter communications efforts Kossovsky advised.  

Undercutting without redirecting was how Kossovsky described one method and added the “those who know better will ultimately win the day,” line as a supplementary line of defense.

“Once your office is on fire, is it time to buy sprinklers? Sure you can get the hoses out, but there will be damage,” he explained. “The notion of reputation in particular is a game of psychology - reputation is all about winning the hearts and minds of stakeholders.”

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  • Jacy 2/7/2017 12:42:41 PM
    The biggest D&O risk presented by a Trump Presidency is the coming awareness of how overpaid fat cat Corporate Execs are. Directors have allowed these bloated money-wasters to get filthy rich on stock options, bonuses and golden parachutes. When I graduated college in 1960 the difference between the salary of an entry level white collar employee and the CEO was approximately 40 times. Now the difference is 100 times or more. And their behavior is anything but "unpredictable". Worst occurrence is when the CEO leads a company down a path to failure and then is "let go" with a severance package not to be believed. A shakeup has to be coming.
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  • 2/7/2017 1:31:49 PM
    Agreed. So many CEO's have personal interest in front of the best interests of the company or its shareholders. They milk it for all they can until they are to,d to leave or find a bigger cow to milk.
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  • Small Business Owner 2/7/2017 3:02:53 PM
    If you think Trump is going to reduce fat cat Corporate Execs you aren't paying attention. He surrounds himself with the worst examples of fat cat execs and billionaires and caters to their needs (lower taxes tilted in favor of the highest income brackets, fewer regulations that protect the public and less integrity by example, by his own words "the code of ethics does not apply to the president"). He lives by the belief that if you repeat an "alternative fact" enough times the public will buy it and he's right. A closer look at everything he is trying to accomplish is to the benefit of the "fat cat execs" of which he is a prime example. The pay discrepancy between middle and upper incomes is going to be far worse if his policies are enacted. He is perhaps the greatest con man of all time.
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