You may be asking… what does enterprise risk management have to do with social media? Most companies have accepted social media into their marketing and advertising strategies—even if they don’t understand it, or invest in it, as a business tool.
This can be dangerous.
According to Michael Krigsman on his blog IT Project Failures, although the benefits of social media are clear, such as direct access to customers, shortened feedback cycles, and personalized marketing—the risks may not be.
A report by consulting firm Altimeter Group identifies four big areas of concern regarding social media risk management:
- Damage to brand reputation
- Releasing confidential information
- Legal, regulatory, and compliance violations
- Identity theft or hijacking
“It is interesting to note that 66 percent of respondents consider damage to reputation or brand a significant or critical risk,” says Krigsman. “These include campaigns from external sources such as a blogs and Twitter.”
Krigsman notes that managing risk from external threats like social media is far more difficult than developing internal policies that govern employee behavior and disclosure.
“External threats are less susceptible to control and generally can only be addressed through influence, which is precisely where the challenge and difficulty lies,” he says. “Moreover, managing external threats effectively requires coordinated action between the social media team with legal, PR, and senior management. All this increases the level of complexity in responding to external social media threats.
North Carolina State University’s Poole College of Management indicates a white paper by Crowe Horwarth entitled Managing Social Media Risks Related Materials also identifies reputational damage as a major risk category. Top sources for reputation risk include the public, employees, and other organizations.
Build a Social Media Risk Management Mitigation Team
The first step is to create a multidisciplinary social media risk management mitigation team.
“Social media risks can affect more areas than a company’s IT department,” says Poole College of Management. “Therefore, the company needs to bring together a team comprising of senior members from various departments to mitigate the risks.”
The team needs to have an action plan in place and be ready to respond at all times; practicing drills and mock mitigation exercises can help.
In a different survey the Altimeter Group discovered that “76 percent of social media crises (including external and internal) could have been diminished or avoided had companies been ready.”
Be sure to conduct risk assessments periodically to identify the likelihood and potential impact of perceived risks. Then implement any controls necessary to mitigate the risks. Expand current policy to encompass social media and implement safeguards.
Be Proactive, Not Just Reactive
Monitor social media channels, even though it may seem time-consuming. “Any company’s social media mitigation strategy would be incomplete without the company actively monitoring potential social media activities that may expose it to risks,” advises Poole College of Management. “The organization can keep track of social media issues related to it using social customer relationship management (CRM) tools.”
In his article, “Using Social Media to Mitigate Reputation Risk” in Risk Management Magazine, senior editor Jared Wade cites a survey by BRANDfog, a digital branding firm, where nearly 85 percent of respondents said they trust a company more when its CEO and top executives communicate via social media.
“How exactly that trust translates into reputational value is murky—as is everything regarding the upside and downside of reputation,” says Wade. “But if the best-known way to avoid reputation risk remains ensuring that the public thinks highly of your company and trusts your brand, it would seem that having your executives send out a few tweets or Facebook posts every week is a pretty small investment.”
Companies in all industries have seen their brands tarnished slowly over time through smaller attacks by unsatisfied customers, notes Wade. However, says Lindsay Durfee of PR/PR, if you have a strong social media presence you will naturally skew the search results for your brand in your favor.
“If someone searches your brand, you want them to see the following on the results page: your paid ad, your corporate website, your blog, Facebook page, YouTube channel, LinkedIn, your tweets and Twitter account,” says Durfee. “Because now you have taken up almost all 10 spots on the search result pages of Google, Yahoo! and Bing. Customers searching for you will see everything you have to offer instead of websites trashing your organization.”
Wade writes that the more active a company is in social media, the more “friends” and “fans” it will have. “These people may be able to help a company through a crisis,” says Wade. “Instead of relying only on internal staff to help mitigate the damage, the company will have a group of consumers that may do some of that work for them.”