Managing The Risks Of Social Media

Businesses should adopt international best practice and the strictest legal position in relation to its use of social media, whilst ensuring it is not against local laws.

The benefits of social media to a business are far reaching in their scope. Social media presents businesses with an effective marketing tool and potential to promote brand awareness in a way that is likely to be cheaper and more accessible than traditional marketing methods. It can be an important communication channel that allows businesses to share information, both internally with employees and externally with consumers and for recruitment purposes. For insurers in particular, social media provides a valuable opportunity to engage with consumers and gain market intelligence.

However, all these attractions, such as the ease of sharing information and the real-time nature of the medium, also pose significant risks. Businesses are faced with managing two strands of social media-related risks - the online persona of the business itself and the use of social media by the employees of the business. The potential for reputational damage is limitless, and privacy, data protection and data breach are all significant issues that businesses need to monitor and manage. In the highly regulated insurance sector, the risk of making improper statements or disclosing financial information is even more paramount.

The rise of social media has forced businesses to reassess their risk approach, highlighted by the fact that social media is now "ranked among the top five sources of business risk - on the same level as financial risk", according to Mr Fadi Sidani, the Partner in charge of Enterprise Risk Services, Deloitte Middle East. Social media is particularly pertinent in the Middle East, where the population is full of highly active web users. According to the Arab Social Media Report, issued by the Dubai School of Governance in November 2011, over 86% of active web...