Social media for corporations makes many board directors a little wary. While social media brings many new opportunities for corporations, it also brings its fair share of risks. Negative remarks about a company can go viral in a heartbeat, causing reputational risk. Risk oversight for social media is a fairly new area of risk oversight, and boards need to establish responsible ways to monitor it.
Social media brings new opportunities for meeting business goals and objectives. It also brings new ways of engaging with stakeholders and it costs less than traditional marketing methods. Most experts believe that an enterprise-wide approach is necessary for overseeing social media efforts.
It’s no longer enough to simply have a social media policy. Boards need to decide who will handle the risks related to social media, how they will engage with stakeholders about it and how to keep up with the evolution of technology.
The Audit Committee and Social Media
It’s customary for boards to delegate some degree of risk management to their audit committees. Boards must weigh their decisions carefully on whether the board or a committee should be responsible for overseeing social media risk.
Many boards approach social media in silos, which makes it more difficult to track and monitor. Boards need to consider many things in deciding who can best oversee social media. They have to consider what the most significant reputational risk is that could arise from social media. In addition, it’s appropriate to consider the company’s strategy for mitigating reputational risk that arises from social media. Monitoring the company’s reputation on social media platforms is a vital part of being able to respond quickly to a comment before an issue goes viral.
Social media is a terrific way to monitor information about the company. It’s also an excellent medium for listening to what people are saying about a company. Companies can easily use social media to influence the investment communities and their customers.
It’s crucial for companies to integrate their corporate social media strategy with their corporate communications strategy. Social media outlets may give corporations an early heads-up about an issue that could evolve negatively before the damage is too difficult to control.
A recent Forbes article called, “Boards Need a Social Media Strategy for Crisis Management,” reports that companies should word their responses carefully on social media. The article states that companies should be sure their responses are genuinely authentic and truly resonate from the heart. Planning a strategy will require some pre-planning and standing ready to tweak it according to the situation and release it immediately if necessary. Time could be of the essence in preventing further reputational damage.
Other things that boards and audit committees need to consider are the company’s policies regarding social media. A past trend has been for companies to caution employees about getting involved in making comments about the company on social media. New trends in corporate social media indicate that a better approach may be to train employees to act as social media ambassadors.
Another topic for boards of global companies to consider is how their international relations departments are using social media platforms for financial communications.
Boards Need to Take a More Active Role in Social Media Oversight
In addition to making decisions about who will be responsible for social media oversight, boards also need for form plans for how they can best remain informed about social media policies and activities.
Boards and managers need to have continual discussions about the various facets of social media and the impact they can have on the company. Corporate executives may benefit from the experience of sending corporate messages out themselves.
Some experts feel that it’s a mistake for boards to automatically delegate the responsibility for social media oversight to the audit committee. Monitoring social media requires a vast degree of judgment and subjectivity, which are major strengths for boards of directors.
As with other types of risks, it’s important for boards to have documentation about social media activities, risks and incidents because of the liability involved. A board portal system provided by Diligent Corporation is the best tool for documenting the board’s discussions about how they’re handling social media issues.
Social Media and Cybersecurity Risks
To combat risks related to cybersecurity, many of today’s boards are looking to add non-executive directors with expertise in digital technology. According to a 2013 Korn Ferry report, only 1.7% of non-executive directors among the FTSE 100 would be considered technology proficient.
When it comes to social media marketing and other communications, boards need more than periodic updates. They need to be able to ask the right questions, beyond how many mentions the company has or how many interactions are registering.
In many cases, boards need assistance with how to use social media to move the company forward. Qualitative and quantitative metrics will point boards in the direction of social media to better understand customer satisfaction, employee satisfaction and stakeholder engagement.
The solution to being able to provide better social media oversight may lie in the board requiring more frequent presentations on social media data. This might include curated content on social media, such as a weekly summary of data and statistics.
Final Thoughts on Board Risk Oversight for Social Media
Boards have long left it to management to cover the special opportunities and risks created by social media, but as the implications of social media extend far past reputational risk, the tables are starting to turn. Board change is happening far more slowly than technology is advancing.
The 2009 Deloitte Ethics and Workplace Survey indicated that only 58% of board executives agreed that the board should be responsible for reputational risk related to social media. Only 17% of executives felt they had adequate programs in place to monitor and mitigate reputational risks connected with social media.
Regardless of whether the board takes responsibility for social media and related risks, or whether they delegate the responsibility to the audit or risk management committee, there needs to be proper oversight. Ultimately, the board of directors is responsible for that oversight.