ISFS · Question #19
Your company is in the news as a result of an unfortunate action by one of your employees. The phones are ringing off the hook with customers wanting to cancel their contracts. What do we call this…
The correct answer is B. Indirect damage. Option B is correct because the damage described is indirect - it flows as a secondary consequence of the reputational harm caused by the employee's action. Customers canceling contracts represents lost future revenue triggered by news coverage, not a primary, immediate loss to…
Question
Your company is in the news as a result of an unfortunate action by one of your employees. The phones are ringing off the hook with customers wanting to cancel their contracts. What do we call this type of damage?
Options
- ADirect damage
- BIndirect damage
How the community answered
(40 responses)- A25% (10)
- B75% (30)
Explanation
Option B is correct because the damage described is indirect - it flows as a secondary consequence of the reputational harm caused by the employee's action. Customers canceling contracts represents lost future revenue triggered by news coverage, not a primary, immediate loss to company assets.
Option A (Direct damage) is wrong because direct damage refers to immediate, tangible harm to property or assets - think equipment destroyed in a fire or data wiped in a breach. There is no primary physical or direct financial loss in this scenario.
Memory tip: Think of it as a ripple in a pond. The employee's action is the stone (the incident); the negative news is the first ripple; customers canceling is the second ripple outward - that secondary ripple is indirect damage. If the stone directly broke something, that's direct damage.
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