Something else to think about besides identity theft coverage

      I found an interesting article in Business Week which the debates the need. it was written by Michael Fertik and Rossana Fiske at Reputation.com.

PRO: NEW MEDIA DEMANDS NEW INSURANCE

We insure the things most important to us: our life, health, home; in business, our corporate risk, revenue, key people. We insure these things because we know how precious they are.

Reputation is the most important asset a company possesses. The Economist Intelligence Unit has found that 75 percent of a company’s value is tied up in its reputation. When a company’s name gets tarnished because the chief executive is caught up in a scandal, an environmental disaster occurs, or workplace conditions are criticized, revenue falls, the stock price slides, and the acquisition of new customers slows.

Today, reputation lives on the Internet. More than 90 percent of consumers use the Web to research companies and products before buying, and 80 percent make decisions based on what they see. If a disgruntled former employee is slandering your business online, customers won’t take the time to evaluate your company’s products further—they’ll do business with your competitor instead.

There are two kinds of reputation insurance that matter. The first is “informal insurance:” building up digital reputations before problems occur by making sure companies control the top 20 Google results for their names and own the Twitter, LinkedIn, and Facebook accounts for those names. Businesses manage their reputations proactively by making sure the Internet accurately reflects their offline successes. When such companies suffer Internet attacks, they already enjoy “prophylactic” layers of technical protection.

The second is “formal insurance:” Over the past 24 months a growing number of organizations have been demanding dedicated reputation insurance products in the same way they buy errors & omissions insurance, data breach insurance, and professional liability insurance. It’s a classic use of insurance, a classic hedge, and it makes perfect sense.

When 75 percent of a company’s value is tied up in its reputation, a big insurance market seems not just smart but inevitable.

CON: PR IS THE SAFEST, SOUNDEST MEASURE

by Rosanna Fiske, Public Relations Society of America

Having the protection of an insurance policy is a reassuring thought for many business leaders, but it does not address why a company would require reputation insurance in the first place. That often boils down to reassessing how it relates to its stakeholders, something insurance policies were never meant to do; rather, it is the forte of experienced public relations and communications professionals.

Insurance is just that—an indemnity for when something happens. It doesn’t help a company understand the potential consequences of its actions better or provide counsel to mitigate the impact of a business’ actions before they are set into motion.

But public relations does.

Purchasing reputation insurance to hedge one’s bets against a possible corporate crisis may cause some executives to see the policy as a panacea for their management shortcomings. It becomes a short-term fix to what is often a long-term problem.

In the digital age, a company’s reputation is perhaps its most valuable asset. A 2011 study by the Public Relations Society of America found that 97 percent of American business executives believe CEOs should have a well-developed understanding of the role of corporate reputation management. That requires something far more nuanced than a reputation insurance policy.

It requires a public relations team that provides strategic communications counsel to, and is a part of, a company’s C-suite.

Insurance is useful when the outlook looks dire; however, it should be the last resort. Just as exercising and eating healthy foods can stave off illness, strategic and proactive public relations can serve as preventive measures for a business, no matt