3 min read

Identifying Social Media Risks

Aug 25, 2014 6:30:00 AM

identifying_social_media_risksEvery minute of the day, Facebook users share 2,460,000 pieces of content. Twitter users tweet 277,000 times. YouTube users upload 72 hours of new video. Over 120 users sign up for LinkedIn. That’s a lot of action!

The benefits of social media use for businesses have become clear. It helps with building brand and awareness, managing reputation, crowdsourcing, customer service, gathering customer insights, recruiting, driving website traffic, and the list goes on. But with these benefits come risks. The first step to managing the risks is to recognize them.

The risks will vary based on your business, industry, and specific use of social media. A Grant Thornton survey of senior-level executives reports the following as risks which cause the most concern: damage to brand reputation, disclosure of proprietary and/or confidential information, corporate identify theft, and legal/regulatory and compliance violations.

We’ll highlight a few of these risks and strategies for managing them.

Reputational Risk

Even if you establish social media policies and regularly monitor your brand, you will still be susceptible to reputational risks. You cannot control what people outside your company say on social media. This could be your customer and it could be fraudsters. One negative comment about your company from a consumer or a remark by a disgruntled employee can quickly reach thousands of people. The quick spreading remarks can damage your reputation, and in turn, your sales or market share. Implementing a social media policy and monitoring the activity around your brand are still crucial, but it is also important to make sure you are aware of the additional risks and have a plan of action in place for potential social media crises.

Disclosure Of Proprietary Or Confidential Information

Your employees sign confidentially agreements when they start work. You train them on what can and cannot be shared outside of work – client information, trade secrets, etc. But as your employees become more active on social media, there are more risks for disclosure of this confidential information. It is often inadvertent. And there is frequently an illusion that what you share on social media has some privacy to it. Yes, there are often privacy features available on social networks but rarely do these fully protect your posts and many users aren’t familiar enough with the settings and how they work.

Legal And Compliance Concerns

Vicarious liability is the liability of a principal for the acts of its agents. It can result from the acts of independent agents, partners, independent contractors, employees, and children. As it relates to social media – a company could be liable for actions of their employees such as their Facebook posts, tweets, and blog comments. Even when social network activities are done on a non-company device, a personal social media account, and when the employee is off-duty, employers can still be exposed to potential claims of defamation, invasion of privacy, and other legal action.

There are numerous employment-related legal and compliance concerns like privacy violations, protecting employees’ rights to engage in social media when off-duty but still ensuring they aren’t posting damaging content, looking through social media sites to screen applicants, among many other concerns. The development and implementation of social media policies tailored to your business and your culture are necessary to mitigate these risks.

Advertising and marketing use of social media can expose companies to risks: from false or misleading advertising, to defamation, harmful speech, and copyright infringement. Companies need to be aware of the regulations and properly monitor their accounts.

Mitigating Your Social Media Risks

The before mentioned risks are just some of those that may impact your business. In order to properly mitigate social media risks, it is important to do the following:

  • Assess your social media risks. Make this a collaborative effort – bring in IT, HR, legal, marketing, and your executive leadership.
  • Develop and implement social media policies and governance.
  • Monitor social media postings, comments, and activities across all platforms.
  • Educate and train your employees on your social media policies and on how to appropriately use the various networks

It may sound contradictory given what you just read, but don’t let the risks of social media push you away from utilizing it. The benefits to your company are vast! If you shy away, you are likely to fall behind your competitors. However, take time to identify and assess the risks then develop strategies to mitigate them.

 

Gibson

Written by Gibson

Gibson is a firm of advisors and consultants that help clients get to the proactive side of insurance. We specialize in working with companies looking to find their edge—where they are growing as an organization, differentiating themselves in the marketplace, and preparing for current and future risk. Together we will find the perfect combination of insurance and consulting.