Social Media in the context Corporate Reputation Risk Management

This article builds on "Why reputation risk management is the Board's ultimate responsibility" 

Having established that reputation risk management is the Board's ultimate responsibility, and having noted that it is not yet commonplace to see systematic attention being paid to reputation risk management, note that the risk to corporate reputation increases significantly when we begin to consider electronic media in general, and social media in particular.

As it is so easy for any statement on any company matter made on any electronic medium to be spread, the impact of one person making even one negative comment - in some cases in the comfort of relative anonymity - has the potential to cause inestimable harm to the reputation of the company. Building on my blog article entitled "Social media corporate reputation risk management and measurement", a systematic approach to proactively managing social media reputation risk needs to be put into place within the scheme of a larger reputation risk management framework, which itself should be part of a larger risk management framework.


If you are in any doubt about the power of social media on your brand, please read the article and watch the video about "Singer gets his revenge on United Airlines and soars to fame", where a singer wasn't successful in claiming compensation for damage to his guitar from United Airlines until he leveraged social networking in the form of YouTube. The message ended up going viral, with 11 million views as of today, 11 million customers and potential customers that Dave told about his bad experiences with United Airways at the push of a button! The cost of all this to United Airlines? 10% of it's share value or US$180 million, according to a recent article in The Economist!

However, while it's important to realise the reputation risk of social media, it is just as important to realise that social media can be used as much as a powerful tool to enhance your reputation as it can to mitigate the negative consequences of social media brand bashing when they happen. This can be done in two ways:

• by monitoring social media and reacting IMMEDIATELY to negative commentary, remembering that while the window for negative publicity is huge, the window for positive response is tiny, as BP learnt to its detriment during the oil spill disaster off Louisiana last year. Clearly it's not worth your while to do a United Airlines and to ignore it!
• by creating affinity groups for those social media users who are already your customers, so that they are kept in the loop so to speak about any activities that influence your brand

Ultimately, as much as the most powerful weapon against negative social media is total engagement with those users on those media wherever they may be, that same level of engagement can also be significant in the context of growing your reputation, and therefore of growing your brand equity.