Although social media strategies such as maintaining a Facebook page or Twitter feed, provide organizations with a wide range of opportunities, they also expose them to new risks.

“Because social media is extremely varied and organizations are increasingly reliant upon technology, a myriad of risks can arise,” noted Robert Parisi, senior vice president, Marsh Cyber/Media product leader.  

“For instance, the hacking community has evolved from cyber-vandals defacing Web sites to organized crime targeting valuable data. Social media ‘chats,’ which can include defamatory remarks about a person or company, can also create liability for the individual or employer responsible for the statements.”

Infringement of intellectual property — primarily copyright and trademark infringement — are also risks associated with the use of social media. Members of a social networking Web site may use the site as a platform to share protected intellectual property, or might use a third party’s intellectual property on their Web site.

To mitigate their exposure, companies need a consistent and integrated risk management strategy, which may include implementation of social media policies, such as defining what employees are permitted to say and whether they can speak on behalf of the company, according to Parisi.

• Others questions for risk managers to consider include:
• Is social media incorporated into the detection, reporting, and escalation criteria in your crisis management plan?
• Are you already monitoring social media?  If so, what is being done with the information?  
• What do you know about your company’s social media profile and strategy?
• What are the capabilities of your communications team during a crisis, including in social media?
• Are trademarks such as Twitter usernames and Facebook vanity URLs registered?
• Is reputational risk incorporated into ERM or other internal risk dashboards?
• Have you validated your response capability? Do your crisis management exercises incorporate social media risks/drivers?

Parisi added, “It is inevitable that social media and social networking will continue to grow in the coming years.  Failure to be informed about social media and neglect in establishing protocols can expose companies to significant liabilities. Marsh’s social media and networking experts can help clients learn more about effectively preparing for and managing the risks associated with new media.”