There are all kinds of risks financial companies tell you about (or at least should) when they sell you a mutual fund or insurance policy. But have you ever heard of ‘headline risk‘?
Well, that’s the risk that a negative news headline will drive down your financial prospects. Companies are often terrified of these risks, as it erodes the stock price and decimates shareholder value. As pensioners who bought BP shares found out – the more it stayed in the news, the worse it did on the stock exchanges. It’s not necessarily a confirmed news on a proper news channel or in a newspaper, an internet rumor is enough.
Companies are increasingly asking PR experts to run a comb through every announcement, so that their stock price does not erode for any other reason than, well, the real news. Rich pickings for PR agencies?