From left: Amit Gupta and Aliette Leleux.
The global social network is growing more rapidly than many companies are presently equipped to handle. As Accenture reports in "A Comprehensive Approach to Managing Social Media Risk and Compliance," within a single year, from 2012 to 2013, the social network audience leapt by 18 percent to 1.73 billion people.
By 2017, this number is expected to reach 2.55 billion people or about a third of the world's population. Furthermore, an annual report of Fortune 500 firms also revealed that 77 percent are active on Twitter, 70 percent manage Facebook pages, and 69 percent have Youtube accounts.
Clearly, global companies—including Singapore's financial institutions—must make social media risk management an imperative. It needs to become a daily practice, rather than a haphazard scramble to counter an unforeseen crisis. After all, Singapore boasts the highest smartphone adoption in the world, at 85 percent, according to Google's Consumer Barometer. This is a tricky issue since people tend to say rash comments that are top of mind (read: not always fully thought through) when using social media on their phones.
Negative global social network exposure, or inappropriate or unauthorised statements that appear to be made in the company's name, can result in lost trust and lost revenues, in short, serious damage to a financial institution's reputation.
Some of these social media risks include the following.
- Fraud: Information on social media has the potential to go "viral" almost instantly in a well-connected wireless world. Last year, the false story about a White House bombing posted on the Associated Press' Twitter account resulted in losses of about US$150 billion in US stocks.
- Loss of Intellectual Property: Corporate espionage is a thriving business that has been made easier by the growth of social media platforms such as LinkedIn and Facebook, in which data and information can be posted and misused accidentally or maliciously.
- Financial Loss: Malware is often disguised as legitimate links on social networks, and people can inadvertently grant hackers access to their personal data and corporate information stored when they click on them, which is particularly alarming for banks, which handle sensitive personal customer data.
The social media environment is complex and its risks, while apparent, are difficult to quantify. However, a proactive and comprehensive approach can help influence how companies are perceived online and provide a framework on how to anticipate and mitigate these threats.
Accenture recommends the following social media risk management approach for financial services institutions.
- Governance: Establish new structures and policies for managing social media risks. These include well-defined roles and accountabilities for specific types of social media risks, strategic discussion between the various business units, acceptable-use policies for social media, and well-defined social media risk tolerance levels.
- Processes: Adjusting operations for pro-active social media risk assessment and monitoring. This means identifying the risks and business opportunities of social media, assessing and reporting these risks to a social media risk manager who takes the necessary actions, and ensuring that risk monitoring is continuous.
- Systems: Managing data effectively and leveraging new technologies to mitigate social media risks. These technologies include social media data mining to improve business intelligence, text analytic engines to segment information to support better decision making, data security and storage, and dashboards that enable management to look across factors and see where vulnerabilities and risks are in order to make better decisions.
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