Although business use of social media marketing will rise significantly this year, most small and midsize businesses aren’t prepared for the significant risks and exposures involved.
More than half (53%) of senior financial executives surveyed last September by Grant Thornton L.L.P. and Financial Executives Research Foundation Inc.(FERF) said they expect social media to become more prevalent in corporate marketing strategies during the next 12 months; and nearly seven in 10 (68%) described social media as a critical or important component of their marketing.
At the same time, the survey found that risk management and compliance efforts lag far behind implementation of social media as a corporate tool. More than three quarters (76%) of executives surveyed admitted their company doesn’t have a formal policy on employee use of social media; while 61% haven’t developed an incident management plan to address fraud, privacy breaches, and other potentially devastating liability exposures.
According to the survey authors, “Aside from publishing-related risks such as defamation, libel, and copyright infringement, and anti-competitive behaviors such as false advertising and disparagement of a competitor’s product, companies using social media as a marketing tool can find themselves exposed to fraud, theft of sensitive data, and other cyber security risks.”
Yet, 22% of executives surveyed don’t believe corporate use of social media carries risky – and only 27% said their company reviews its social media content regularly. Among companies surveyed, only (21%) said train employees to recognize and report fraudulent activity. Companies that have a formal fraud/privacy breach management plan, split oversight of those responsibilities among general counsel (24%), corporate security (19%), human resources (14%) and IT departments (14%).
“Social media cuts across many areas of a company (such as HR, marketing, communications and legal, among others),” said FERF Senior Research Associate Thomas Thompson Jr. “This means that any social media policy should use a multidisciplinary approach.”
Our risk management professionals would be glad to help you review your company’s exposure to risk management liability – just give us a call.
