Activities labelled with seemingly harmless terms such as “tweets,” “likes” and “friend requests” don’t hint at the dangers executives are discovering in social media.
But a survey of US executives, including many at multinational companies, found social media is one of the top five risks organisations face. The Deloitte & Touche LLP report Aftershock: Adjusting to the New World of Risk Management said that 27% of survey respondents predicted social media would be among the most important risk sources over the next three years.
The global economic environment (41%), government spending (32%) and regulatory changes (30%), respectively, were the top three expected risks identified by executives in the survey – and the only ones named by a higher percentage of respondents than social media.
“Social media wasn’t even on the radar a few years ago – now it’s ranked among the top five sources of risk,” Henry Ristuccia, Governance, Regulatory & Risk leader at Deloitte Touche Tohmatsu Limited, said in a news release. “The rise of social media is just another contributor to the volatile global risk environment that companies are being forced to navigate.”
Headlines from across the globe describe examples of social media causing problems for organisations and their employees:
A story in The Moscow Times chronicled the firing of an employee who made a badly received joke on the official Twitter account and Facebook page of Sberbank, Russia’s biggest lender.
A story written by The Associated Press said Facebook itself was pressured to take down a page that insults Aborigines, and reported that the Australian government accused Facebook of using its base in the United States to avoid anti-discrimination laws in Australia.
Although companies are eager to capitalise on social media to market their products and services, the technology is so new and its reach so broad that companies often are ill-prepared to handle the risks it presents.
Just 8% of public company audit committee members surveyed recently by KPMG reported that their company could respond adequately to a crisis that goes “viral” through social networks. The “viral” aspect of social media – a comment’s ability to go worldwide in a short amount of time – is what makes it such a significant risk, said J. Mike Jacka, co-author of Auditing Social Media: A Governance and Risk Guide.
“Everything about social media is scalability,” Jacka said. “Technically there’s not a single new risk. The difference is, it used to be five people [in the conversation] and now it’s a million.”
Recognising that risk may be the first step toward managing it. And as social media sits among the top five risks along with such mainstays as the volatile world economy and regulatory pressures, it’s clear that executives understand that there’s a reason for concern amid the seemingly innocuous tweets and “likes” in cyberspace.
—Ken Tysiac (firstname.lastname@example.org) is a CGMA Magazine senior editor.
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