By Professor Bernadette A. Minton, Academic Director, The Risk Institute
Arthur E. Shepard Endowed Professor in Insurance
During the last decade, the rise of social media, which accelerated with the introduction of smartphone technology, has provided unprecedented opportunities for organizations to build influence, their brand, and reputations. The organic nature of social media allows enterprises to reach millions of consumers and influencers in ways they never could before.
Yet, this opportunity does not come without risks.
During a recent Risk Institute Executive Education session on Social Media and Risk Management, Prof. Lanier Holt of The Ohio State University’s School of Communication stressed the effect of social media in today’s media climate is that “Perception IS the Realty.” Customers, bloggers and others can use social media to quickly turn on a firm/brand, leaving in shambles a distant memory of its once vibrant self.
Thus, it is not surprising that, in the same session, Bill Deakin, Executive Director, North American Consumer Products, EY, noted that recent surveys consistently report that executives view social media as one of the leading risks facing their organizations.
An organization’s brand is a collaborative effort of most, if not all, areas of the firm – from marketing and sales to finance and operations. As such, the benefits and risks of social media rarely impact just one area of an organization. So, as Deakin stressed, a social media strategy must be an organization-wide responsibility.
By integrating enterprise risk management strategies for understanding, evaluating and managing these risks, organizations can capitalize on the opportunities inherent in social media, which include:
- empowering consumers to comment anywhere and anytime on an organization and what it is doing and companies to provide real-time feedback to customers letting them know they are being heard.
- providing organizations a venue to tell stories in engaging ways to a wider audience, helping to build reputation, customer affinity and sales.
- allowing companies to analyze in real-time online conversations to assess the effectiveness of the firm’s products or initiatives.
- providing firms a way to provide the information in real time to manage risk by getting ahead of negative events, not allowing others to tell their stories for them.
The power of social media is something that was unimaginable even 10 years ago. But, today it can empower an entrepreneurial startup with the same brand-building abilities as the world’s largest and most well-established company. When approached with an enterprise risk management perspective, organizations can create value by balancing the power of social media engagement with its associated risks. To find out more about The Risk Institute’s perspective on enterprise risk management, visit fisher.osu.edu/risk.
To find out more about The Risk Institute’s Executive Education Risk Series, or to register for the upcoming session on Demand Uncertainty on April 30, 2015, visit our webpage.