Social Media – Risk vs. Reward

Posted by Albert Sica on May 16, 2013 2:43:17 PM

One of the most prominent areas of marketing today involves social media.  Right now you are reading this posting via an on-line platform and, while this is becoming the norm, the risks social media brings are far from “normal”.

The risks from misuse of social media are many and can include (1) compliance and legal risks; (2) reputational risks; and (3) operational risks.

Organizations that use and encourage an active social media strategy should also have a thoughtful risk management program in place to guard against potential impacts of ill-conceived postings and the damage they can cause.

There are a few basic components of a social media risk management strategy which should be part of any program:

An Acceptable Use Policy – Your company must adopt a clearly outlined policy of what it deems acceptable and what is not. While this can be a very difficult task, it can go a long way in protecting your organization from future claims (specifically in regards to compliance with consumer protection and privacy laws).

Employee Training on Social Media Policies – for many small companies, the use of social media may be confined to a select person or group of people that monitor news feeds, make posts and generally manage the various platforms where your company chooses to market online. While having specific social media leaders can greatly reduce the risk of releasing posts that do not align with company values, it also reduces the potential for greater employee inclusion and participation in the company’s social media marketing efforts. Regardless of how you approach your employees’ involvement in social media, be it all-encompassing or very selective, senior leaders must clearly identify and, employees must understand the guidelines to follow when posting online, and the potential repercussions of not following company policy. Once your company policies and best practices regarding social media have been established and implemented, the next step is to establish that these guidelines extend to employees personal accounts too. While company posts are the most direct way to reach potential customers and company ‘fans’ and ‘followers’, employee postings on personal accounts can lead to an equally devastating reputational risk recovery process; it is important for a company to take a strong position on this matter and provide transparent accountability to all of its employees.

Platform Identification – When determining how your firm should approach social media, or simply reviewing your current practices when it comes to online sharing, there are a few basic areas you should address first in order to use these platforms most effectively:

  • What are the [specific] company goals you want to achieve by using social media?
  • How does any given platform contribute to the achievement of those goals?
  • Who is your target audience? How will you mature established customer relationships, grow your fan base and brand awareness, and convert fans into customers?

So, before you just dive right in, and join every social media platform because hey, “any publicity is good publicity”, right? … think very carefully. Social media must be used as very calculated tool that must not only be executed consistently, but also with the agenda of engaging your target audience, and making them want to engage back! Just making posts and occupying social media real estate will not benefit your company, and may, in fact, be detrimental. Like any other marketing tool, you must be aware of the risks, understand the potential for growth and company enhancement, and establish a firm plan which will guide you along the process – don’t make the mistake of following your social media plan to the letter because regardless of how flawless your creation may be, the online marketing world is an ever-evolving animal which must be monitored and responded to appropriately.

So before you send that next tweet or post that new status, remember your guidelines and before you press send ALWAYS consider ALL the consequences – good and bad!

If you would like to discuss how you and your company can best utilize social media while minimizing the risks, or need help with implementing social media best practices, please feel free to contact me at or at 732.395.4251.

Topics: Cyber Risk, Cyber Security, Risk Management Blog, Social Media Risk, Total Cost of Risk, Total Cost of Risk (TCoR)

The ALS Group

Risk Management Blog

We manage more than a quarter billion dollars of premiums for a diverse range of clients around the globe. 

Our areas of expertise include:

  • Enterprise Risk Management (ERM)
  • Cyber Security & Cyber Liability Insurance
  • Construction Management
  • Customized Risk Management Assessments (RMAs)

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