This study extends research on the insurance-like protection offered by corporate social responsibility (CSR) against negative events by unpacking the concept of moral capital. We propose two pathways to generating this moral capital, depending on whether firms’ CSR is targeted at a foreseen or unforeseen negative event. Applying this distinction, we argue that the effectiveness of each pathway depends on the firm’s institutional context. Specifically, engaging in CSR once events can be foreseen provides the more effective insurance when stakeholders’ interests are protected by strong institutions. Conversely, in institutional contexts with weak protection of stakeholders’ interests, the firm may derive more such benefits when it engages with its stakeholders at the time the negative event cannot yet be foreseen. Using employee downsizing as our empirical setting, we find that our sample of 18,083 firm-year observations distributed across 59 countries provides support for our argument.