RISK FOCUS: REPUTATION
Gear Up for Social Media
and strategies help
against the ravages of
social media attacks.
By Alex Wright
The vast majority of businesses still haven’t taken steps to get ahead of social media risk.
In this increasingly technologically advanced world, it seems that no one is immune from the reaches of social media. With nearly 2.5 billion social media users worldwide, it’s more likely than ever that a company could see its hard-earned reputation shattered overnight. Worse still, a recent Grant Thornton survey found that companies are
massively exposed, with 59 percent of respondents saying they don’t carry out any
form of social media risk assessment.
Because of the unpredictability and speed at which reputational damage can
spread on social media, risk managers and companies need to be proactive and
have a plan in place should the worst happen. But in doing so, they need to first
consider all risk mitigation and transfer options available, including artificial
intelligence (AI) and algorithms.
Dealt with properly, an incident can be turned around and potentially even
enhance a company’s reputation. But handled badly, it can result in millions of
dollars in lost sales and severely damage a company’s share value.
“The danger of not having a plan to manage reputational risk on social media
is that if something negative is posted about your organization, before you know
it, it has gone viral, causing untold damage to you and your brand,” said Elizabeth
Carmichael, president of Carmichael Associates.
REPUTATIONAL RISK DANGERS
Reputational risk on social media has undoubtedly been heightened by the rise
of fake news, making it increasingly difficult to distinguish between fact and fiction,
said Steel City Re’s CEO Nir Kossovsky. It has been exacerbated by a growing
sense of anger and frustration among large swaths of the population, he said.
“There’s sometimes a temptation to be dismissive of an initial social media
attack, especially if you consider it unjustified or the source is not credible,” he said.
“But that is no longer acceptable given the blurring of lines between real and
fake news and the speed at which fake news can travel.”
Failure to tackle the problem can often worsen the situation, said Anthony de
Fazekas, head of technology and innovation at Norton Rose Fulbright Canada.
That is because inaction can be seen as an admission of guilt, he said.
“This can impact your claim as well,” he said.
“In the courtroom, if a party takes no action for what is considered a ‘long
“Tackling the issue proactively is the
time’ in social media time, despite having knowledge of a defamatory statement,
The result can be millions of dollars in lost revenue and customers, and
ultimately a tarnished reputation, said Chandra Seymour, senior vice president
with Marsh Risk Consulting’s strategic risk consulting practice. The only sure way
of addressing that, she said, is to get out in front of the problem.
only way to ensure it doesn’t get out of
hand,” she said.
“Reputation typically accounts for
30 percent of a company’s stock price
and getting it back can be much harder
than had you taken proactive steps to
protect it in the first place.”
Randy Nornes, executive vice
president at Aon, said that the first step
a company should take is to identify
risks that might lead to dissatisfaction
among stakeholders. The company
should then create a plan for how to
“As a best practice, these
‘wargames’ should be conducted
at least twice a year, not as a pro
forma exercise, but as strategic
opportunities to improve the
organization’s overall reputation
— Chuck Saia, CEO, Deloitte Risk and Financial
• Nearly two-thirds of companies
haven’t assessed their social
media risk exposure.
• Most organizations struggle to
identify who should monitor and
manage social media risk.
• AI is becoming increasingly
effective as a monitoring and