Both individuals and companies run the risk of having malicious statements made about them in the social media, online forums, websites, along with growing mobile commerce trends as well as blogs, and as this is the case, they may benefit from purchasing insurance coverage that has been designed to protect their reputation on the internet.
However, at the same time, these individuals and companies may wonder whether or not this coverage will indeed be worth their while.
Many people would argue that because reputation is a person or business’s most valuable asset, protecting it should be among its top priorities. In fact, according to the Economist Intelligence Unit, three quarters of the value of a business is connected to its reputation. Should a business’s name be harmed due to a scandal, a disaster, a lawsuit, slips in stocks, drops in revenue, or other problems, there is inevitably a decrease in new customers.
The internet makes it very easy for anyone using the web to leave any comment they want. For example, a frustrated former employee could leave whatever comment they want about the business, which can then be read by a consumer doing his or her research online about an upcoming purchasing decision.
To protect against the impact of this occurrence, there are two different kinds of reputation insurance available. The “Informal” form helps to rebuild reputations before damage happens. This helps businesses to proactively manage their reputations over the internet in advance so that if they suffer an attack, they have already built a strong positive protection against it.
The “Formal” form is a more dedicated form of reputation insurance that covers in the same way as data breach and errors & omissions protects. It functions as a traditional form of hedge.
The primary argument against this protection is that it does not address the underlying problem that would require protection in the first place.