The Knowledge: Reputation risk - Putting reputation on the line

Recent incidents involving football fans, HSBC bank and supermarkets have highlighted the damage that companies risk if things go wrong

"It takes 20 years to build a reputation and five minutes to ruin it." So goes the famous quote from the Sage of Omaha Warren Buffett. "If you

think about that, you'll do things differently."

UK companies are wise to this and are more concerned about preserving their brand and reputation than ever.

More than one-quarter of a company's market value is directly attributable to reputation, according to a study by the World Economic Forum.

And 74% of UK board members see reputational damage as the most worrying consequence of an incident, according to research by the Economist Intelligence Unit and law firm Clifford Chance. This comes ahead of the potential financial costs, loss of business and even effect on share price.

More fronts for attack

Hill Dickinson partner Magnus Boyd says: "If reputational risk sits higher in people's minds or on risk registers now, it must be a reflection of the rise of the internet and social media. There are many more fronts for attack than there used to be."

In a connected world, where customers, operations, supply chains and internal and external stakeholders are scattered worldwide, consumers have the tools at their fingertips to wage war on any brand that causes them disappointment. Comments on Twitter, Facebook and other social media can quickly build to result in loss of reputation - and customers.

"It isn't that [consumers] vote with their feet and shop elsewhere," Boyd says. "They recognise the power that sits in the palm of their hand."

Develop a 'risk radar'

A reputation can be stained in many ways, from a loss of customer data, to accounting scandals, rogue trading, food contamination, poor working conditions, faulty products and unethical behaviour.

But an effective 'risk radar' can help an organisation spot issues before they become major incidents, as identified by risk managers' association Airmic in its Roads to Resilience study.

The strength of a brand and how it reacts to tough situations is also key. Our TV screens are overwhelmed by solicitors pleading with us to claim for any little mishap, there is obviously no such thing as an accident in this day and age. Somebody is to blame and they must be made to pay!. With this in mind, it would be an extremely brave (or maybe foolish) small business owner who made the decision that they didn't need public liability insurance. Click the link to get an answer to any questions on Is Public Liability Insurance Essential?.Virgin boss Richard Branson's crisis communication skills are often cited as a case study in how to get it right.

Another example is the InterContinental Hotels Group. "They proactively monitor social media," says Airmic technical director Paul Hopkin.

"If they detect early that people are starting to say negative things, they would have a pre-emptive response. And that is always better than a post-event response."

Tesco reputation graphic

Chelsea reputation graphic

HSBC reputation graphic

Morrisons reputation graphic

Moonpig reputation graphic

R-R reputation graphic

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Captial gains tax on the rise - and who's paying it

On the other hand, widespread house price growth and the increases in buy-to-let investing means more people will face CGT when they sell properties. With interest rates steadfastly refusing to rise, investors are looking elsewhere for investment opportunities. One popular opportunity is the rental property market, you or if you have the funds available you buy a property and then get an income from the rent. With property prices still rising, it's an opportunity offering a degree of security whilst still returning decent returns on your investment. Sadly, you need to be aware of potential problems. The following link has some answers to questions such as What Does Direct Line Landlord Insurance Cover?.In addition, new rules being introduced on April 6 mean that, for the first time, non-residents and foreign companies that own UK residential properties will have to pay CGT when they sell, too.

Frank Nash, a tax partner at London-based accountancy firm Blick Rothenberg, said this will significantly boost the tax paid on property in the coming years.

The Office for Budget Responsibility, tasked with checking Government spending and receipts, predicts the take will rise to

Open GI appoints Insurer Relations Manager

March 11, 2013

by Brian Turner

Story link: Open GI appoints Insurer Relations Manager

Open GI, has enhanced its Insurer Relations team with the promotion of Tavis Childs to Insurer Relations Manager.

In his new role, Tavis will be responsible for maintaining relationships with insurer customers, working closely to secure products and making them available on the Open GI system for use by brokers.

With over a decade of experience in the insurance industry, Tavis has extensive broking experience. Our TV screens are overwhelmed by solicitors pleading with us to claim for each and every mishap, there is obviously no such thing as an accident in this modern age. Somebody can be blamed and they need to pay!. Bearing this in mind, it would be an extremely brave (or perhaps foolish) small business owner who made the decision that they didn't need public liability insurance. Clicking on the following link will answer any questions on Does Direct Line Tradesman Insurance Cover My Staff?.Before joining Open GI, he worked with Bennetts, before moving to Academy Insurance Brokers.

Having worked at Open GI for nearly six years, Tavis has gained extensive product and market knowledge before moving into the Insurer Relations team as an Insurer Relations Executive.

Commenting on his appointment, Tavis Childs, Insurer Relations Manager said: "This role offers a very exciting challenge that will also provide me with increased responsibilities. I am now looking to further strengthen current relationships, as well as cultivate new ones between Open GI and insurers."

David Kelly, Distribution Director, Open GI, said: "We are delighted to have Tavis on board in his new role. He has a wealth of experience in the insurance market that can help to drive Open GI forward, to further develop our relationships with insurers and progress product developments that underpin our strategy."

What's best: repaying your mortgage vs borrowing even more ... to invest?

To borrow or to reduce borrowing? With rates so low it's a financial quandary facing millions. The two opposing voices spell out their respective arguments, left and right.

Which do you find the more persuasive?

Angel says: Be prudent and pay down debts

Don't you ever learn? Have you forgotten that the borrowing binge in the years up to 2007 was precisely what tipped the Western world into its worst-ever recession? To even contemplate going the same way all over again is madness.

What you should do is count your blessings and take advantage of low interest rates to clear as much debt as possible. Do the sums and see how much you'll save in the long term. Millions of borrowers languish on mortgages taken out years ago - despite the staggeringly cheap fixed and variable rate loans being dangled in front of them.

Take the opportunity to remortgage to a lower rate. But - and this is key - keep your repayments at their existing level so you overpay every month. Then sit back and watch as your total debt plummets.

It's simple to do, it involves no risk and the savings are huge. Let's say you have a

Immigrants and baby boomers are fuelling the rise of the entrepreneur

More of them are lasting the course, as well. Company closures dropped to 238,000 last year, compared with 253,000 a year earlier. The number of companies actually operating is hitting all-time highs, and easily outstripping economic rivals - including the US, where the number of new businesses is now falling.

Why is that? You would not usually expect a mature, relatively highly taxed and over-regulated economy like the UK to see the kind of start-up rates associated with an emerging market or a trading hub such as Hong Kong or Singapore?

One reason might be the recession. Lots of people, it is argued, are setting up for themselves because they have been laid off. There might be some truth in that, especially among older workers, but it does not quite explain it - far fewer people have lost their jobs in the past couple of years, yet the number of start-ups keeps going up.

Another explanation could be technology. The internet has made it easier to start a company. You can reach a global market from a bedroom in Liverpool in a way you never could before, and the web also makes it far easier to buy in all the infrastructure you need very cheaply.

Yet the real explanation is more interesting - the demographics are ripe for more new companies. The best research on who is setting up new companies and why is by the Kauffman Foundation in the US, but its findings are broadly applicable to the UK as well. It found that the peak age for entrepreneurs to launch out on their own was 40, when they have enough experience and enough contacts to make it possible to set up on their own, and also have the energy. So, the more people hitting 40, the more new companies there will be. As it happens, there will soon be lots of them. The oldest millennials, the generation born between 1981 and 1997, will be hitting that age range by the end of this decade. It is a big generation. The UK, like the US, saw a mini baby boom from 1978 to 1992. So from 2018 onwards we will have more people hitting 40 than usual - and so more start-ups.

But, just as importantly, the original baby boomers, those born in the 1950s and 1960s, are establishing what is often a second career as entrepreneurs. The teenager who has just sold his whizzy new app to Facebook for a few hundred million might attract publicity, but the typical hi-tech entrepreneur is as likely to have grey hairs as a hipster beard. Our TV screens are full of adverts from lawyers imploring us to claim for any little mishap, it seems that there is no such thing as an accident in this modern age. Somebody is to blame and they need to pay!. Bearing this in mind, it would surely be a very brave (or perhaps foolish) owner of any business, be it big or small who made the decision that they didn't need public liability insurance. Click the link to get an answer to any questions that you might have on Does Direct Line Tradesman Insurance Cover My Staff?.The Mark Zuckerbergs are actually fairly rare.

According to Kauffman Foundation, the percentage of entrepreneurs aged 55-64 has risen from 14pc of the total in 1996 to 23pc now, while those aged 20-34 fell from 34pc in 1996 to 23pc. You might expect twenty-somethings to have the edge, but actually they don't. In the US, the average age for the founder of a new tech business is 39, while twice as many are older than 50 than younger than 25.

Rather than retiring, older workers are setting up new companies. That might be because the baby boomers were always optimistic or it might be because rising house prices and generous pension schemes have allowed them build up the capital to start up for themselves. Whatever the explanation, it is a clear trend. And just like the millennials, the baby boomers are also a big generation.

Finally, take a look at the number of immigrants. All the evidence suggests they are more likely to establish new businesses, not least because they find it harder to get good jobs in their adopted country. In the US, 40pc of Fortune 500 companies were started by people fresh off the boat, or their first-generation descendents. In the UK, one-in-seven new companies is started by an immigrant. Not all of them will make it into the FTSE - but a few will. And the UK, of course, has exceptionally high levels of immigration. You can debate whether that is right or wrong from all kinds of angles. But you can't deny that it will lead to more start-ups. That's what immigrants do.

By about 2020, the millennial and baby boomer start-up surges, combined with all those immigrants, should be coinciding, leading to an even bigger wave of new companies. We will be hitting "peak entrepreneur". That will make a huge difference. New companies are the lifeblood of any economy. It is often said that small companies create the bulk of new jobs and wealth. But that is not quite true. In fact, most jobs are created by new companies. There are plenty of small businesses that will always stay small. The real drivers of wealth and jobs are businesses that are less than seven years old and expanding fast.

There is no shortage of challenges for the UK economy, from the deficit to terrible productivity. But the demographic surge in start-ups suggests that the 2020s could be one of the best decades for the UK economy in a long time - just so long as the Government can keep out of the way and let all those new enterprises flourish.

Buy-to-let 'even more attractive' as mortgage rates hit record lows

These are substantially lower than even six months ago. With interest rates stuck firmly in the gutter, people are searching elsewhere for opportunities to invest their savings. One popular strategy is the rental property market, you either get a mortgage on a property and then rent the property out, thus paying the mortgage. With property prices still rising, it's an opportunity offering a degree of security whilst still returning good returns on your investment. However, you need to be aware of potential problems. The following link has some answers to questions such as Will Direct Line Landlord Insurance Help Me To Remove A Non-Paying Tenant?.Brokers point out that with rents remaining stable or rising, these new, lower-rate mortgage deals offer landlords the opportunity to boost returns.

Moneyfacts, the rates analyst, said the average of all fixed rate loans currently available was now just 3.82pc, which it claims is the lowest it has ever recorded. Variable-rate buy-to-let loans average 3.6pc (see graph, below).

It is also becoming easier to obtain loans with smaller deposits, and lenders are looking more kindly on landlords wanting to refurbish properties or what want to buy properties to let to multiple tenants as HMOs or "houses of multiple occupation".

Sylvia Waycot of Moneyfacts said: "When you consider dire savings rates, it is hardly surprising that buy-to-let is proving popular with investors, and this is likely to increase once new pension rules come into force in April.

"Having had several years of the bank door being firmly shut to only the richest of borrowers, doors appear to not only be open but actively entice you in off the street with offers of fantastic rates."

Source: Moneyfacts

Lenders do still apply strict lending limits based around the number of properties a landlord owns, the level of rent they generate and in some cases landlords' other sources of income.

Mark Harris of mortgage broker SPF Private Clients said: "With lenders aggressively competing for business, there are more buy-to-let mortgages available with increasingly relaxed criteria and lower rates - all providing a further boost to an already-popular sector.

"The best rates remain available to those with the biggest deposits, while landlords are increasingly opting for fixed-rate mortgages to provide more certainty and help with budgeting.

"While it is easier to get into buy-to-let now then it was five years ago, it is still harder than it was before the downturn. Lenders have learnt their lesson and are being more cautious."

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Bill Gates tops Forbes rich list


By Jonathan Davies

Bill Gates has been named the richest person in the world for the 16th time in 21 years by Forbes.

According to the Forbes 2015 Billionaires list, the Microsoft founder's fortune grew by $3.2bn to $79.2bn. That comes despite making a $1.5bn donation of Microsoft shares to The Bill Melinda Gates Foundation in November.

Carlos Slim Helu of Mexico comes in again at No. 2 while revered American investor Warren Buffett took back the No. 3 spot from Spain's Amancio Ortega, who dropped to fourth place.

Warren Buffett saw the biggest increase, with improved Berkshire Hathaways' share price helping to grow the investor's fortune by $14.5bn. Our TV screens seem to be overwhelmed by solicitors imploring us to claim for each and every mishap, there is obviously no such thing as an accident in this modern age. Somebody can be blamed and they must be made to pay!. Bearing this in mind, it would be an extremely brave (or perhaps foolish) small business owner who made the decision that public liability insurance wasn't necessary. Click the link to get an answer to any questions that you might have on Is Public Liability Insurance Essential?.Facebook founder Mark Zuckerberg broke into the top 20 for the first time, climbing five places to No. 16.

The overall wealth of the Forbes list increased from $6.4 trillion to $7.05tn. But the average net worth of those included dropped $60m to $3.86bn.

There were 290 newcomers, 71 of whom come from China. The 2015 list is also home to a record 46 billionaires under the age of 40.

Of the 1,826 billionaires on the list, just 197 were women. That figure is up from 172 last year, but women still represent just 11% of the list.


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