Social Media in Business: Friend or Foe?
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1 Social Media in Business: Friend or Foe? Susan Morton Marsh Risk Consulting Reputational Risk & Crisis Management Leadership, Knowledge, Solutions Worldwide.
2 Agenda Social Media Defined What is it, who is using it Business Issues Leveraging Social Media Role of social media, related polices Effective Crisis Management What Happens When Things Go Wrong? Impact of social media on management processes and communications Discussion Marsh Leadership, Knowledge, Solutions Worldwide. 1
3 Social Media Defined Leadership, Knowledge, Solutions Worldwide.
4 What Is Social Media? Marsh Leadership, Knowledge, Solutions Worldwide. 3
5 Types of Social Media Blogs Microblogging Twitter Plurk Social networking Facebook LinkedIn MySpace Orkut QQ Skyrock Vkontakte Cyworld YouTube Marsh Leadership, Knowledge, Solutions Worldwide. 4
6 Even More Marsh Leadership, Knowledge, Solutions Worldwide. 5
7 Who Is Using Social Media 46% of American adult internet users use a social media site like Facebook, Linkedln or MySpace (October 2009, PEW and American Life Project) 65% of American teen Internet users use social media (October 2009, PEW Internet and American Life Project) 70% of the audience of Facebook (the second most popular internet site after Google) is outside of the United States (January 2010, Economist) Users have been spending more time on social media sites than since February 2009 (January 2010, Economist) Marsh Leadership, Knowledge, Solutions Worldwide. 6
8 Business Issues: Leveraging Social Media Leadership, Knowledge, Solutions Worldwide.
9 Corporate Twitter Accounts 22% (108) of the primary corporations listed in the 2009 Fortune 500 have a public-facing corporate blog a 6% increase over the 2008 study 86% of these blogs (93) link directly to a corporate twitter account a 300% increase over the 2008 study 35% (173) of the Fortune 500 have active Twitter accounts (a post within the past thirty days); and nearly 50% of the top 100 companies (47) have a Twitter account Society for New Communications, The Fortune 500 and Social Media: A Longitudinal Study of Blogging and Twitter Usage By America s Largest Companies, February 2010 Marsh Leadership, Knowledge, Solutions Worldwide. 8
10 Benefits of Social Media Open a dialogue with customers and clients Direct communications, not through third parties Build a community not a database Create advocates for your company, product, and services Social media can be used to gain insight Promote testimonials Spread knowledge to decrease risk Marsh Leadership, Knowledge, Solutions Worldwide. 9
11 Corporate Social Media Policies What information can be disclosed Making sure information is accurate Realize there can be personal liability for content Disclaimers are advisable, but not a shield from liability Do not discloses company financials or confidential information Make sure social media does not run afoul of regulators Federal Trade Commission (FTC) Securities Exchange Commission (SEC) Financial Industry Regulatory Authority (FINRA) Food and Drug Administration (FDA) Marsh Leadership, Knowledge, Solutions Worldwide. 10
12 Developing and Implementing Social Media Policies Considerations when designing a social media policy Reflect the culture of the organization Review and apply recognized industry best practices Align with existing communications approach and strategy Work closely with legal counsel The policy is only the first step adoption is key Educate, educate, educate! Remember: a policy won t protect your reputation, particularly during crisis Marsh Leadership, Knowledge, Solutions Worldwide. 11
13 Effective Crisis Management: What Happens When Things Go Wrong? Leadership, Knowledge, Solutions Worldwide.
14 Crisis Management Defined Crisis Management is the strategic framework that guides an organization and its senior leaders to prepare for, manage, and recover from issues and adverse events that threaten the organization s operations, people, strategy, valuation, reputation, and future. Identifies issues, risks, and vulnerabilities Establishes governance for overall preparedness, management, response, and recovery Provides the roadmap to manage the crisis Guides decision making at all levels of the organization Orchestrates and aligns related incident response activities, including continuity, security, emergency response, human impact, communications, supply chain, etc. Instills confidence in stakeholders and protects the brand Marsh Leadership, Knowledge, Solutions Worldwide. 13
15 The Trust Deficit Trust in governments, corporations is at historic lows This trust deficit has created an environment in which social media can thrive and be believed Trust in traditional media has also been eroded Getting it first is more important than getting it right This risk is particularly high if the story meets the prevailing narrative both in a crisis and during normal times Trust in social media itself is also starting to erode Not everything in social media is true! Social media can be as manipulated as any other form of communication Marsh Leadership, Knowledge, Solutions Worldwide. 14
16 Social Media Game Changer? Leveraging social media Everyday in terms of communications, marketing, engagement with customers During a crisis creates new challenges and new opportunities for crisis management Social media exacerbates risks, but also provides new tools to manage crises effectively Speed Challenges Nobody is in control Negative experiences/issues amplified Opportunities New tools to engage directly with stakeholders Proactively engage to build a reservoir of goodwill Useful tool in identifying emerging risks through monitoring Marsh Leadership, Knowledge, Solutions Worldwide. 15
17 Crisis Management Challenges Crises are inherently difficult to manage as: Typically triggered by significant negative issue or event Limited information on situation Impact of decisions (intended and otherwise ) Dual operations Increased number of players and decision-makers Stress Increased external pressures Social media can exacerbate already existing communications challenges What can be known, will be known Decreases time available to respond Inconsistencies will be revealed Stakeholders will remember how they were treated and act accordingly Marsh Leadership, Knowledge, Solutions Worldwide. 16
18 Understanding Your Stakeholders Perspectives Classic examples of poor crisis management: a significant disconnect between the organization s decisions and the expectations of stakeholders Understand the point of view of stakeholders look at the issue from the outside in Social media is an important tool to help understand stakeholder perspective and should be incorporated into early-warning systems Social media is not all encompassing Demographics may not represent your stakeholders Vocal minority may exaggerate risk Communicate directly with employees, customers, other stakeholders Marsh Leadership, Knowledge, Solutions Worldwide. 17
19 Engage or Ignore? Organizations that Chose to Ignore It s not The New York Times Engaging adds credibility to unfounded rumor If we ignore it, the issue will go away Organizations that Chose to Respond The tip of the iceberg social media as the canary in the mine If we ignore it, the issue will become larger Marsh Leadership, Knowledge, Solutions Worldwide. 18
20 Crisis Communications and Social Media Incredibly varied and every situation is different, no simple answer Remember to Acknowledge the role that social media can play Factor it into overall crisis communications approach Decisions should not be driven by social media but by a broader crisis management strategy Marsh Leadership, Knowledge, Solutions Worldwide. 19
21 Discussion Leadership, Knowledge, Solutions Worldwide.
22 Questions for Risk Management Do you have a social media policy? Is it understood and used? Have you reviewed your crisis management plans recently? Is social media incorporated into the detection, reporting, and escalation criteria in your crisis management plan? Are you already monitoring social media? If so, what is being done with the information? It s not just a communications issue. What do you know about your company s social media profile and strategy? What are the capabilities of your communications team during a crisis, including in social media? Is reputational risk incorporated into ERM or other internal risk dashboards? Have you validated your response capability? Do your crisis management exercises incorporate social media risks/drivers? Marsh Leadership, Knowledge, Solutions Worldwide. 21
23 Thank You Susan A. Morton Marsh Risk Consulting Marsh Leadership, Knowledge, Solutions Worldwide. 22
24 Disclaimer The information contained herein is based on sources we believe reliable, but we do not guarantee its accuracy. Marsh makes no representations or warranties, expressed or implied, concerning the application of policy wordings or of the financial condition or solvency of insurers or reinsurers. The information contained in this publication provides only a general overview of subjects covered, is not intended to be taken as advice regarding any individual situation, and should not be relied upon as such. Statements concerning tax and/or legal matters should be understood to be general observations based solely on our experience as insurance brokers and risk consultants and should not be relied upon as tax and/or legal advice, which we are not authorized to provide. Insureds should consult their own qualified insurance, tax and/or legal advisors regarding specific coverage and other issues. The case studies included herein and discussed are for illustrative purposes only and should not be relied upon as governing your specific facts and circumstances. All insurance coverage is subject to the terms, conditions and exclusions of the applicable individual policies. Marsh cannot provide any assurance that insurance can be obtained for any particular client or for any particular risk. This document or any portion of the information it contains may not be copied or reproduced in any form without the permission of Marsh Inc., except that clients of any of the companies of MMC need not obtain such permission when using this report for their internal purposes, as long as this page is included with all such copies or reproductions. Marsh is part of the family of MMC companies, including Guy Carpenter, Mercer, and the Oliver Wyman Group (including Lippincott and NERA Economic Consulting). Copyright 2010 Marsh Inc. All rights reserved. MA Marsh Leadership, Knowledge, Solutions Worldwide. 23
25 Leadership, Knowledge, Solutions Worldwide.
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