Chartis UK has extend its D&O policy to include an endorsement that will pay for public relations expenses to help either mitigate a crisis which results from a credible threat of confidential information about a company being posted on a social media platform or website, or manage the reputational damage to a company caused – or potentially caused – once disclosures are made. The trigger for the former is where the CEO or CFO expects the stock price to fall significantly as a result of rumours of disclosure, while in the latter case it is the publication of confidential information.

“The domination of the global news headlines by Wikileaks’ publication of leaked government documents is a vivid illustration of the power of social media” said David Walters, vice-president, financial lines at Chartis. “Although the focus has been on government there is, however, no room for complacency for business. In a recent interview Julian Assange, Wikileaks founder, said that 50% of the leaked material they were holding related to the private sector

“This type of disclosure of internal or confidential communications presents a number of threats for companies and their directors and officers. The initial problem is one of embarrassment and reputational damage, while the threat of subsequent litigation is very real. Our objective in extending the policy was to be proactive in helping our clients to mitigate and manage potential reputational damage, and reduce the risks of shareholder suit and potential claim."

The risk of new or augmented claims from these types of leaks is very real. Wikileaks has spoken publicly about their plans to release thousands of documents relating to a major US bank, as well as information they hold on the tech industries, energy companies and environmental issues.

"It is entirely possible revelations like these could aid the plaintiffs in ongoing litigation. Equally, if documents relate to events or activities about which there has previously been no prior company disclosure, then disclosures on social media sites could potentially lead to entirely new litigation unrelated to existing cases,” Walters adds.

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