Risk Management in Social Media

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Two stories playing out today have our attention for similar reasons. Both examples relate to the influence of social media, namely Twitter, as a function of risk management.

The first is a well-written guest piece in today’s Wall Street Journal that explores the role the Boston Police Department’s Twitter feed played in correcting the misinformation that spread rapidly in the wake of the drama surrounding the frantic chase and apprehension of the Boston bombing suspects.

The Boston PD found itself in the unique position of being the authoritative voice on a rapidly developing, fluid situation that was complicated by inaccurate and conflicting media reports.  Their approach to leveraging social media is a quintessential, albeit unusual, example of the ways in which todays institutions are rapidly becoming their own media outlets, whether intentional or not.

However, in stepping forward in this role, the Boston PD opened itself to serious scrutiny and liability. Imagine if the department was viewed as trying to stifle, rather than correct, valuable information being disseminated at lightning speed. Their bold approach would not have been possible without a well-structured, carefully executed and internally aligned approach to social media designed for exactly this type of situation.

The second example occurred hours ago when The Associated Press Twitter feed was hacked with a hoax regarding an attack on the White House that never occurred. The Dow Jones Industrial Average dropped 145 points in two minutes – a chain of events impossible for humans to have prompted alone.

This development illustrates the risk that occurs when you combine high-speed, electronic trading with an unquenchable desire among investors for informational advantage. While details continue to emerge, it will be interesting to determine just how this process unfolded and the extent to which trading systems are trolling social media outlets for keywords to trigger this type of sell off.

In the coming days and weeks, Twitter will be forced to answer a series of uncomfortable questions regarding its security and approach to authenticating information while news organizations rethink what processes are necessary to balance their approach to security with their need to be “first.”  We smell a series of Congressional inquiries, sequestration be damned.

All of these issues are further complicated by the SEC’s recent decision to allow guidance via social media.   While the data from the recently released 2013 In-House Counsel New Media Engagement Survey shows that in-house counsel and those executives they advise may not be actively participating in Twitter discussions, it’s a tool they will be forced to become familiar with by becoming active users in some fashion- either directly or indirectly.

This raises another interesting question – is it possible, or even advisable, to familiarize yourself with the nuances of a tool like Twitter indirectly?

Regardless, an organization’s approach to social media needs to be elevated out of the back rooms of the “social media manager,” a role often managed by the capable yet inexperienced 20-something set, and into the executive suite.

Leveraging social media platforms is quickly becoming a risk management priority in addition to a reputational opportunity.

This post can also be found here on the 2013 Inside Counsel Survey microsite.