A Look At Social Media Risks Affecting Businesses Today

This column will discuss the increasing prevalence of social media sites like Facebook and Twitter, and companies' need to insure they have adequate insurance coverage to address these specific risk exposures.

As the latest online technologies offer new possibilities for the business industry as well as individuals, the challenges are a critical concern that must be addressed. Many organizations are ignoring these opportunities and risk it at their own peril. Those who assume a proactive attitude can enlarge their client base, cultivate new business and boost their brand awareness. Those who do not can be subject to negative advertising and possible litigation stemming from employee or consumer charges of wrongdoing. A memo dated May 30, 2012 made public by the National Labor Review Board (NLRB) communicates the increasing danger that organizations face concerning their social media policies. It is important that companies adequately inspect their risk management policies and insurance protection to include social media exposures.

In regard to employees' social online networking, businesses need to find out what types of control are essential for their specific situation. Do employees use social media as a part of their job? Are they allowed to use company resources even when posting on personal sites? In the NLRB memo mentioned earlier, many organizations were cited as using unlawful practices to control their employees' social networking activities. Many businesses were vague or too broad in the language used and the language could possibly be interpreted as a censorship of their free speech rights. Walmart was commended for their social media protocol because they made clear any ambiguous wording so as not to disregard any associate's First Amendment or state-constitutional free speech rights. Failure to practice appropriate controls have the potential to contribute to illegal employment practices, misleading advertising, discrimination against a legally protected status (e.g. race, gender) or abuse of federal and state laws. There could also be more exposures to those organizations under the charge or surveillance of a regulatory organization.

In regard to business records management (RM) plans, Symantec among other security control organizations emphasize the priority of establishing a proper retention plan to safeguard against risks. A Forbes.com article about social media risks included a statement from Gartner Group figuring that by the end of 2013 half of all corporate litigants "will be asked to produce material from social media websites for e-discovery".  Failure to develop a sound RM policy could undermine the ability to show records mandated by the court as well as raise the likelihood of unintentionally releasing material that would otherwise be kept from the public eye. Creation of a transparent and executable guideline can shield against legal liability or an embarrassing public relations snafu. 

The public enjoys the ability to communicate through social media sites like Facebook so the business industry needs to respond, adjust or lose an possibility to realize the great potential that comes with these growing social media technologies. One way some organizations are taking advantage of the chance is by developing "canned" text or pre-approved topics/statements that may be posted by employees. This approach can be an practical way to begin a proactive social media policy and safeguard their resources at the same time.

In essence, businesses need to acknowledge the risks and address social media policies in regard to crisis/risk management, intellectual property, client/employee privacy, and compliance with federal and state laws and industry regulatory restrictions. With the expanding use of technologies, organizations should also speak to their insurance agents to make sure they have proper insurance coverage - some providers require special riders in order to provide coverage against social media liability.

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