Early in my consulting days I was involved in a fairly extensive study about enterprise risk. The study was sponsored by IBM and Microsoft and revealed over 100 potential risk that any business has any day of the week.
For public companies reputation risk ranked in the top 20 most important in terms of impact on equity, revenue and market position. This was of course prior to the explosion of social media.
What Are The Risk of Social Media?
Risk managers have traditionally not been highly elevated within corporate america. Considered a “must have” function due to regulatory affairs most line and executive managers didn’t consider a risk manager of relevant importance. Now with the transparency ushered in by social media one must wonder whether the traditional risk manager is tuned into the potential risk or whether they have a clue about the related dynamics.
Tom Giles writes: I don’t know about you, but if my job function included “risk management” I’d more than likely make sure that risks to the company’s reputation were taken into consideration–wouldn’t you?
Well, according to The Conference Board Reputation Risk Research Working Group and a survey of 148 risk management executives of major corporations, only 49% said that the management of reputation risk was highly integrated with their enterprise risk management (ERM) function.
Maybe the lack of concern is because the role of “reputation risk management” isn’t really something you want your typical risk management guy worrying about–let him worry about the liability insurance and employee identity-cards.
Risk Aren’t Real Until Something Happens
We live in a reactionary society. When something goes wrong we react. When something big goes wrong the government passes legislation aimed at preventing the risk from happening again however legislation usually is short sighted and only increases cost. When it comes to the explosive rates of social media adoption there are a set of risk that every business needs to be aware of. I have categorized these into groups (in no particular order) as a start and will expound upon them later if “the market” responds and ask me to. Here are the top categories:
- Not being aware of social media: If you have no idea what is happening throughout the web with hundreds of millions of people involved then shame on you. You deserve the risk that is about to impact your brand and your bottom line. Who will you transfer this risk to? AIG?
- Doing the right things wrong: So you do know about social media. You are using the tools but have no idea how to engage in conversations with real people, your customers.
- Doing the wrong things right: Now you understand the basic tools but are not participating in the right communities, the right conversations and your the only one in your company doing it.
- Not monitoring the marketplace of conversations: Enough said. How would you know what the market is saying if your not monitoring the market?
- Not guiding organizational efforts and participation; So your the big bad social media expert in the company and yet no one else in the company is using it for the company. Instead they are telling others how bad your company is.
- Not having an educational process in place: Learning is about how, education is about why. Not knowing they why may mean your learning the wrong things
- Not following the right followers: You can connect or follow millions of people but unless they are the right people all you get is a lot of meaningless chatter
- Getting followers but not following: So people are following you for whatever reason but you don’t follow back. How will you know what they think. They could consider you a snob.
- Not staying current with technological and user developments: If you don’t stay current you will be stuck in old technology that becomes obsolete on a daily basis
- Not being in the right place with the right content If your not in the right place with the right content your not engaging people in conversations that matter to you business. Get it?
Any of these can present risk known and unknown. Any of them can hurt your market position, your reputation, your revenue and last but not least your relationships. So, what is your plan to manage these risk? Based on the survey results above few actually have a plan but as soon as the conversations about their business swell most likely their business will be put into a reactionary mode and they’ll always be trying to catch up rather than lead conversations effectively. Get it?
What say you?