As UK companies join the rush to get into e-commerce, there is growing concern about the risk to their reputations - and risk managers say they are unable to obtain adequate insurance cover for the downside.
A survey of members of the AIRMIC e-commerce special interest group found that, while e-commerce is now well-established, few people fully understand the risks involved. AIRMIC members identified reputational loss along with fraud and intellectual property loss as the key potential risks resulting from the use of e-commerce. Intellectual property and reputational loss were also the most difficult areas in which to obtain insurance cover.
Risk managers who responded to the survey, conducted in May, said that neither employee-users nor management boards understand the risks associated with e-commerce/IT. Almost two-thirds of risk managers who responded said that e-commerce had expanded their customer base, but half of the companies use a separate brand name for their e-commerce activities, possibly an indication of their awareness of the potential risks to the company's reputation.
Stuart Martin, chairman of the e-commerce SIG, said: "Our members believe that all sectors of business can benefit from e-commerce, but we obviously have a great deal of work to do before all the risks involved are fully understood, particularly by IT users and their bosses. There is also a belief that the insurance market does not fully understand the risks, which is backed by our members' contention that they are unable to obtain adequate insurance cover for them."
