Rising Risk from Social Media and How to Manage it
When it comes to Social Media, it seems that most of us lack a clear understanding of what this omnipresent phrase really means. Last October’s webinar, presented by Lorena Esparza of LexisNexis, who is currently helping clients develop and implement customized risk management programs enlightens the audience about the real business risks that are presented through social media use.
1/3 of the world is actively using social media, with 1 million more being added daily. Through the course of the webinar, Lorena (pictured below) explores questions including: What is social media and how prevalent is it? What does social media risk look like? & How to efficiently monitor social media to identify potential risk sooner.
Social Media can be broken down into six main categories, most likely with more to be added in the near future. Social networks, social news, micro blogging, forums, media sharing and bookmarking sites are all forms of social media that are used by billions all over the world.
Businesses are using social media in a variety of ways. Nowadays, they can be using up to 10% of their marketing budget on social media. It enhances brand loyalty through the awareness and buzz it creates online, and is also a powerful tool to be able to provide relevant insights into customer trends that we see right now. However there is still debate surrounding the return on investment from digital marketing.
Social Media risks present themselves in a vast array of ways, ranging from an employee tweeting about a new company product to software privacy violations. The types of risk that can be presented are Fraud, Intellectual Property (IP) Loss, Financial Loss, Privacy Violations and Brand Damage. Brands are always vulnerable to reputational risks that can pop up from anywhere, because social media gives power to the individual.
But why is it so important for the financial sector to assess their social media risk? To help institutions with the topic, the regulatory guidelines ‘Social Media: Consumer Compliance Risk Management Guidance’ were published by the Federal Financial institutions examination council (FFIEC) in 2013. 6 members of the FFIEC had requested guidance around the use of social media, and this was made this to allow them to navigate it. Identified were 3 main types of social media risks: compliance, reputational and operational, all of which are based on the regulatory requirements already imposed on financial institutions.
Depending on the type of risk allows us to see who bears the responsibility; social media risk is a process that requires ongoing monitoring and collaborative effort between departments including legal, finance, compliance and marketing & communications.
Lorena informs us that according to a 2015 report by the New York Stock Exchange, 91% of directors believe that they don’t have a good enough understanding of the social media risks that their companies face. Thus she suggests that using a social media compliance policy would educate personnel about the risks and how to mitigate them. Although this is not easy to set up, they are increasingly on the rise.
It is imperative to establish strategic goals in order to get a grip on the amount of information available, but also to be able to react quickly in critical situations. Lorena’s company LexisNexis use the platform Newsdesk to monitor to keep tabs on the media outlets.
In the fast paced globalization that the world sees today, it is important that companies understand the newly evolving social media risks that their company face. It is necessary to be able to react quickly in critical situations, through monitoring brand references (positive and negative) knowing who’s responsibility it is, and monitoring inbound and outbound communications.
Download the webinar and the accompanying slides here:
