Social media has added a layer of complexity and velocity to managing risk that was unthinkable not so many years ago. Social networks have provided the means for organizations to build a brand personality, directly engage with customers, and gain real-time insights on their brand. The drawback, however, is the speed at which a reputation can be put on public trial.
All it takes is for one customer or employee to upload a photo, with or without proper context, and a seemingly innocuous situation can turn combustible. Within moments that photo is making its way around the globe for users of social media platforms to draw their own conclusions, possibly harming your brand in the process.
The damage potential is significant. According to the World Economic Forum, more than 25% of a company’s market value is directly attributable to its reputation. While it may be tough to stop a social-media meltdown once it’s in motion, there are plenty of ways you can prevent the event from happening in the first place.
The more you know, the better you can prepare
You can only act on things you know about — so it stands to reason that the more risks you know about, the more prepared you can be. Forward-thinking organizations are putting this idea into practice with integrated risk management.
Integrated risk management (IRM) connects the dots between all types of risks — insurable and noninsurable, strategic and operational – so you understand what you’re facing, how everything interrelates, what parts of your organization are affected, and the cumulative impact on the business. With IRM, you get the unobstructed view of risk you’ve always wanted but have never been able to achieve with traditional risk management, which is often siloed, decentralized, and focused primarily on hazard risks.
The level of insight and proactivity IRM offers is increasingly important as risks become more complex. Today, an organization doesn’t have to be directly involved in situations where the brand takes a hit—sometimes it’s just guilt by association. The social media universe does not discriminate between the brand, its partners, vendors, or third parties. When an incident happens, it happens to the brand.
Shut down trouble before it starts trending
Consider an auto manufacturer that was experiencing a high number of claims related to fatal accidents. With IRM, claims and safety were able to seamlessly share data and collaborate on a root cause analysis to quickly identify the underlying cause of the accidents. In this case the problem was traced to a defective tire supplied by a third-party vendor. With the third-party risk management team also tied into the same system, immediate action was taken to stop orders for that tire, thereby preventing future incidents – and the possibility of social media blow-back.
Don’t put your reputation “online”
Social media doesn’t necessarily create new or more frequent risks – but it does draw significantly more attention to events that occur and amplify resulting reputational damage. In the past, many events could fly under the public’s radar, but today, it takes mere seconds for a situation to get picked up by an angry customer or the media and start trending on Twitter.
The takeaway for organizations and risk leaders: If you diligently control what you can, you’ll have more resiliency to withstand what you can’t. Integrated risk management gives you the visibility and insight to get in front of more risks than ever before so you can act quickly and intelligently – before word spreads.