The biggest reputational hazard to a company is its own CEO, warned John Hurrell, Airmic's chief executive.
Airmic, the UK's industry group for risk managers and insurance buyers, put out a study called "Roads to Ruin", which said that for 70-80% of corporate reputational disasters, the damage directly stems from the missteps taken by the senior management team.
"In reality chief executives are the chief risk," said Hurrell, speaking at the Airmic conference in Liverpool.
However, 93% of companies don't buy reputational risk cover, according to the UK industry body.
Initial disaster events can be rapidly compounded by negative perceptions of senior management responses, with a notable example being negative media coverage of energy company BP's CEO Tony Hayward following the Deepwater Horizon rig fire and oil spill into the Gulf of Mexico in 2010.
Reputational risk management is essentially emotional risk management, noted John Ludlow, Airmic deputy chair.
There are three major components to look at when mitigating a company's reputational risk from an insurance buying perspective, according to Ludlow.
The first is assessing existing policies within a company; secondly, how insurance responds to the cost of a crisis (whether through claims or deployment of crisis consultants and services); and thirdly, how insurance helps the company rebuild its relationships with stakeholders.