Social media risks? Too important to be left to the marketing department

Social media risks? They are all about business reputation aren’t they? Not at all. They stretch right across most organisations.

To demonstrate this we have created a matrix (consultants do love a matrix!) dividing business concerns into four areas:

  • operational efficiency
  • costs and competitiveness
  • customer influence
  • stakeholder support

Operational efficiency is about the smooth running of an organisation – everything from managing logistics to having a motivated and talented set of employees

Costs and competitiveness concerns the heart of any commercial organisation – the ability to deliver a profit; but is also relevant for not-for-profit organisations which need to operate within budgets

Customer influence considers the way customers and prospective customers feel about an organisation and their brands and products

Stakeholder support concerns the degree to which stakeholders such as shareholders and regulators have confidence in the organisation.

As you can see from the image below, social media risks are spread right across these four areas.

 Image

In the top left, under Costs and competitiveness we have a number of fairly unrelated risks. Social media use can result in the accidental disclosure of confidential information resulting in breach of confidence cases or the loss of a potential patent application. Employees can infringe the IP of third parties bringing potential damages on the company. And, in the carelessness which typifies so much of social media use, contracts can be accidentally entered into. And breaches of data rules can be expensive as well as damaging to a company’s reputation.

Bottom left we have Customer influence. Most of the issues here are about reputation management. Badly managed social media use might result in breaches of advertising rules (which can also be expensive) or a loss of control of company assets, such as the company Facebook page (again, an expensive thing to rectify). Employees can post inappropriate comments that damage the reputation of their employer. Obsolete content can circulate via social media long after a marketing campaign has finished and this brings its own reputational problems. And problems with products and services can sometimes escalate into a full blown social media PR crisis.

There are a good number of issues in the area of Operational efficiency. Problems with social media use can create issues with employee motivation caused perhaps by bullying or over-rigid and unfair management. This in turn can lead to the perception of a company being a bad employer, making it hard to recruit the best talent. Managerial over-enthusiasm can result in staff privacy being breached and even problems with the duty of care employees have to their staff.

And finally there is the area of Stakeholder support. Having the confidence of non-executive stakeholders such as the Board, shareholders and external regulators is very important. And this confidence can easily be damaged through social media. Potential risks include the impersonation of Board members, a failure to adhere to regulations, accidental disclosure of financial information, and even the libelling of clients and suppliers! It is a key part of corporate governance to manage this.

All in all, it is surprising how far social media risks penetrate into every corner of an organisation. And these risks are too complex to leave to a single organisational function such as marketing or PR. Multi-functional teams are required to manage the risks appropriately. 

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