Monday, December 07, 2009

Social Media Risk Multipliers

Social Media Risk Multipliers (1 of 3)

Much is written and discussed about the rewards (potential or otherwise) of Social Media and return on investment, but more and more people are asking (as I have done myself) what are the risks to my business if it participates (or rather its employees participate) in social media.

Having considered a number of risks such as copyright infringement, brand dilution, defamation, data protection, misrepresentation, fraud, implied warranties, amongst others (more to follow in my next blog), I consider the business risks to be no different in the social media era to those of the offline and web 1.0 world. In fact I am assured that the same risks were debated at length when email was first introduced. However, social media is different because of factors that exponentially increase risk, which I am coining "Social Media Risk Multipliers".

My working list of Social Media Risk Multipliers includes:

A. Participation - in a move away from one-way dissemination of information in static form, social media allows participation and interaction on an unprecedented scale. The ability to have conversations at all levels is one of the main draws of social media but increases the risks of the wrong brand message being portrayed or misstatements being made.

B. Immediacy - social media is all but instantaneous. This increases the risk of problems being created and compounded quickly. It also makes containing problems once they occur difficult.

C. Viral - any mistake can quickly be reproduced all across the world in a matter of minutes. Consider a defamatory comment made via twitter. If it is published to only a few individuals the damage may be minimal but if this is retweeted by 10 people who in turn retweet the offending tweet, the damage becomes worse with the publication self perpetuating and almost impossible to contain.

D. Openness - Many of the social media interactions on the web are open and public. Moreover, trending software allows monitoring and aggregation of these public posts which means that mistakes are made publicly and are more likely to come to the attention of people that have been wronged. Therefore, the risk of mistakes or wrongs being picked up is higher and evidence will be easier to obtain via trending software.

E. Casual - the vast majority of social media interaction is casual and especially when content limits are as low as 140 characters. I believe that in this relaxed atmosphere employees are more likely to make statements that they would not if they were using the phone or email. Without guidance this increases the risk of customers potentially being misled, mis informed, provided with unauthorised warranties/offers or worse.

F. No Boundaries - Social Media knows no boundaries. Does you Social Media activity comply with local laws in all countries? For example online gambling in the United States is prohibited. Will promotion via social media be illegal in a particular country and can you choose not to target it? Immediate world wide reach increases the risk of breaching laws.

As with all business risks they can normally be:

1. managed;
2. insured;
3. considered and taken;
4. ignored; or
6. avoided,

but is this the case when the Social Media Risk Multipliers are applied?In a later blog I will consider this non exhaustive list further

From a strategic management point of view it is critical (like any new business venture) to understand and appreciate the risks so that a decision can be made as to whether any return on investment from Social Media activity outweighs the risks to your business.

In an interesting dichotomy many of the key benefits and opportunities provided by social media are also the same features that are multiplying the risk to businesses. More than ever risk versus reward needs to be considered!

As a final question regarding business asset risk: if an employee creates a social media profile and uses it to promote the business, who has the right to the profile followers or connections when that employee leaves - or does it matter? The business or the employee? Arguably a social media profile which has a number of brand followers will be a valuable asset to the business in the long term. In fact a twitter profile disseminating news has recently being purchased in the US for a significant sum.

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