In today's hyper-connected world, a company's reputation can move markets. The Hindenburg report that hit the Adani Group, FIRs against HDFC Bank's CEO, Byju's falling from unicorn status into court proceedings, and public setbacks faced by business leaders like Chitra Ramkrishna show reputational risk is not an emotional concept. Instead, it carries significant financial consequences.
Globally, reputation risk insurance is an accepted risk-transfer tool. In India, however, it remains largely unexplored. Reputation risk insurance can be triggered by specific events that threaten confidence in a company or its leadership, such as regulatory investigations, public allegations, governance lapses or supply-chain controversies. Most insurance policies operate on a named-peril basis, meaning coverage is clearly defined around identified risk scenarios. When activated, they typically fund crisis communications, fact verification, legal costs, and structured engagement with investors, lenders, customers and regulators.
More advanced policies can address deeper problems. Once a predefined loss threshold is met, they can help companies with specific financial impacts like contract loss, customer churn or tighter credit terms. The goal is not merely image repair, but the protection of liquidity, business continuity and enterprise value when confidence has weakened.
According to the World Economic Forum Global Risks Report 2025, India ranks as one of the most vulnerable to misinformation and trust erosion. Considering the heightened risk scenario and the business impact reputation stress can create, this insurance is fast moving from novelty to necessity. It can be structured as both personal and corporate insurance, reflecting the reality that reputational shocks can originate from individuals or the company itself.
A precedent comes from India's experience with cyber insurance and directors and officers (D&O) insurance. The once-niche coverage became mainstream as risks became visible and financially material.
Cyber insurance This market in India is projected to grow from $752.6 mn in 2025 to nearly $7 bn by 2034, driven by digital exposure, data protection rules and rising penalties.
D&O insurance Demand rose 25-35% in the last FY, reflecting growing awareness among promoters, startups and mid-sized companies of the personal liability risks faced by key managerial personnel.
The lesson is consistent: when risks threaten capital, leadership and continuity, Indian companies use insurance to transfer exposure. Reputation risk can follow a similar trajectory.
Reputation risk differs from legal risk because it is shaped by perception as much as by facts. Damage often occurs in the period between allegation and outcome, when uncertainty alters behaviour across markets and institutions.
This makes losses harder to model and price. As a result, early reputation insurance products globally have focused on crisis-response and verification costs rather than open-ended business interruption.
IRDAI's regulatory sandbox and 'use- and-file' regime allow insurers to launch new products quickly and submit them for regulatory review afterward. This flexibility has enabled the rapid growth of India's insurance market and offers a pathway for new-age products. Pilot programmes with large corporates can further refine policy design, loss triggers and pricing before broader standardisation.
Meanwhile, Sebi has stepped in to help businesses with reputation-linked market volatility. In late 2023, it laid down the rule that listed companies must respond to market rumours within 24 hrs, showing that now regulators are counting reputation and information flow as material risks.
Given the financial implications of reputation risk, companies must assess where their exposure lies - across leadership conduct, supply chains, platforms and public-facing operations. They should also evaluate how much of that exposure can be transferred to the insurance market.
Many international companies treat trust-related shocks like any other financial risk, which has fuelled double-digit growth in the global reputation risk insurance market. India's digital scale, narrative intensity and regulatory agility give its firms a similar opportunity to shape this market early.
Globally, reputation risk insurance is an accepted risk-transfer tool. In India, however, it remains largely unexplored. Reputation risk insurance can be triggered by specific events that threaten confidence in a company or its leadership, such as regulatory investigations, public allegations, governance lapses or supply-chain controversies. Most insurance policies operate on a named-peril basis, meaning coverage is clearly defined around identified risk scenarios. When activated, they typically fund crisis communications, fact verification, legal costs, and structured engagement with investors, lenders, customers and regulators.
More advanced policies can address deeper problems. Once a predefined loss threshold is met, they can help companies with specific financial impacts like contract loss, customer churn or tighter credit terms. The goal is not merely image repair, but the protection of liquidity, business continuity and enterprise value when confidence has weakened.
According to the World Economic Forum Global Risks Report 2025, India ranks as one of the most vulnerable to misinformation and trust erosion. Considering the heightened risk scenario and the business impact reputation stress can create, this insurance is fast moving from novelty to necessity. It can be structured as both personal and corporate insurance, reflecting the reality that reputational shocks can originate from individuals or the company itself.
A precedent comes from India's experience with cyber insurance and directors and officers (D&O) insurance. The once-niche coverage became mainstream as risks became visible and financially material.
Cyber insurance This market in India is projected to grow from $752.6 mn in 2025 to nearly $7 bn by 2034, driven by digital exposure, data protection rules and rising penalties.
D&O insurance Demand rose 25-35% in the last FY, reflecting growing awareness among promoters, startups and mid-sized companies of the personal liability risks faced by key managerial personnel.
The lesson is consistent: when risks threaten capital, leadership and continuity, Indian companies use insurance to transfer exposure. Reputation risk can follow a similar trajectory.
Reputation risk differs from legal risk because it is shaped by perception as much as by facts. Damage often occurs in the period between allegation and outcome, when uncertainty alters behaviour across markets and institutions.
This makes losses harder to model and price. As a result, early reputation insurance products globally have focused on crisis-response and verification costs rather than open-ended business interruption.
IRDAI's regulatory sandbox and 'use- and-file' regime allow insurers to launch new products quickly and submit them for regulatory review afterward. This flexibility has enabled the rapid growth of India's insurance market and offers a pathway for new-age products. Pilot programmes with large corporates can further refine policy design, loss triggers and pricing before broader standardisation.
Meanwhile, Sebi has stepped in to help businesses with reputation-linked market volatility. In late 2023, it laid down the rule that listed companies must respond to market rumours within 24 hrs, showing that now regulators are counting reputation and information flow as material risks.
Given the financial implications of reputation risk, companies must assess where their exposure lies - across leadership conduct, supply chains, platforms and public-facing operations. They should also evaluate how much of that exposure can be transferred to the insurance market.
Many international companies treat trust-related shocks like any other financial risk, which has fuelled double-digit growth in the global reputation risk insurance market. India's digital scale, narrative intensity and regulatory agility give its firms a similar opportunity to shape this market early.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
Mitu S Jha
Mitu S Jha is CEO, Eminence