The rising priority of social media risk management

October's issue of Risk Management magazine devoted its cover and most of its contents to the risks of social media.

October's issue of Risk Management magazine devoted its cover and most of its contents to the risks of social media. Far from being anti-social media, the publication sought to put forth a clearer understanding of associated risks so companies could more fully exploit the opportunities.

As my colleague Jeff Hunt points out in one of the magazine's articles, managing such online risk is now a serious, formal business that is increasingly getting the attention of the CEO and the board, so much so that social media risk management and mitigation is being directed by an increasing number of boards at some of the world's largest publicly traded companies.  

Companies that have come to experience first-hand the risks associated with social media include AT&T (dealing with a potential boycott due to bandwidth demands thanks to the iPhone), Dell (customer service problems), and Domino's (employee behavior). 

IBM was an early adopter of empowering employees to utilize social media. However, the company also recognized social media as a reputation risk that should be considered an enterprise-level threat. The company acknowledged that social media's use could enhance or degrade customer satisfaction, relationship building, recruiting, retention, brand building, and competitiveness.

This reality resulted in consensus among IBM's senior executives that social media must be included on the enterprise-level risk map, reflecting their conviction that social media is critical for business success and a risk worth taking to drive commercial gain.

Developing a risk map

Evaluating, anticipating, and managing the potential risks of social media activity are most often the responsibility of the CCO. This process should be proactively driven by the CCO and taken directly to the CEO and board level… before they ask.

One of the goals of such an assessment is to assure the CEO and the board that risks have been identified and understood and that planned mitigation strategies have been developed. The assessment process should include seven steps:

1. Work with your company's legal group to establish a framework for the social media audit.

2. Interview appropriate company stakeholders to understand current perspectives, issues, and concerns.

3. Conduct a review of your current social media properties and create a risk assessment of each. 

4. Initiate an assessment of your current monitoring tools.

5. Execute an influencer identification analysis around the master-brand and coordinate with your product brand folks to ascertain sentiment around all brands.

6. Produce a comprehensive report on current risks and mitigation strategies for each. 

7. Develop a framework for a social media risk mitigation workshop for all marketing and communications professionals, as well as supporting agencies.

Whether you tackle this on your own or bring in consultants with relevant expertise to drive the process, the time for risk assessment is now. 

Bob Feldman is cofounder and principal of PulsePoint Group, a digital and management consulting firm. He can be reached at bfeldman@pulsepointgroup.com. His column focuses on management of the corporate communications function.

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