Social media risk management for board directors

Tuesday, November 01, 2011 | Posted by: Paul Mewett
Categories: Risk | Tags: report, risk, Board, advice, risk management, guide, social media, Strategy, Twitter, crisis, reputation, Facebook, Alan Joyce, PR, Qantas, monitoring, Internet Intelligence

Social media – what’s the worst that can happen? Quite a lot, as Qantas found out, when a social media crisis hit both its share price and its world-famous reputation for safety. Grant Thornton’s Internet Intelligence team reviews the story and suggests ways in which companies can implement a social media risk management strategy.

How social media crashed Qantas’s safety reputation
Qantas never crash, the saying goes, but the airline’s reputation crashed and burned last November when a Twitter storm took hold over a safety incident. And as CEO Alan Joyce discovered, ignoring social media can have a real impact on a company’s bottom line.

Twitter reported that a Qantas A380 had crashed after one of its engines exploded over Indonesia – and this news spread quickly. In fact, the plane had not crashed but made an emergency landing in Singapore. But by the time the company responded, Twitter and other social media news sharing had resulted in severe reputational and financial consequences for the company.

Spreading of misinformation on Twitter, left unchecked, resulted in a real-time collapse in the share price. The incident cost Qantas a reported $80 million and tainted the brand as unmonitored discussion over safety issues dominated social media in the aftermath.

Qantas has since put a team of people in place to monitor both Twitter and Facebook, and to respond to comments swiftly. Joyce stressed the importance of being responsive:

“In this modern day and age with social media, you have to be responsive immediately. You have to be out there with the facts very fast, so it’s changing the whole dynamic and speed to market that organisations like Qantas have to respond to.”

But is the Qantas social media team taking the right approach? At war with social media again this week over grounding its jets, the airline has been criticised for its mechanical and impersonal approach to social media, which in turn has been interpreted as bad customer service.

Whose responsibility?
The Qantas incident shows that social media can be fraught with risk if ignored or not managed. Propagation of false information, negative commentary and leaking of commercially sensitive information are just some of the risks to be aware of.

Paul Mewett, Head of Internet Intelligence at Grant Thornton, says:

“Risk and reputation management is high on every board director’s agenda, but effective control of social media often slips through the net for several reasons. Quite often, there is a lack of understanding at board level of the risks involved and, in many cases, there is no clear strategy or set of policies in place to manage social media risks.”

With consequences so grave, responsibility for social media risk management should lie at the very top. Every board should be speaking to its senior management team about putting social media on the agenda.

Our social media guide for board directors
The first of our new Virtual world, real risks series of reports offers an introduction to navigating the risks of social media to embrace the business benefits and has advice on dealing with implementing a social media strategy ‘from the top down’. It is a must-read for board directors wanting to get to grips with social media best practice.

Download and read the full report here: Virtual world, real risks: When social media becomes a liability.

Pro-actively managing your online reputation
Once you know and understand the risks, the next step is to implement a risk management strategy. It may make sense for you to bring in some external expertise to help with this – which is where we can help.

Grant Thornton’s Internet Intelligence team specialises in monitoring and managing the business risks associated with social media.

The team can help devise a social media policy bespoke to your individual requirements, provide an audit of your brand on social media and monitor activity for key issues, as well as provide reputation internet-based due diligence on individuals and third parties.

If you’d like to find out more about this service, contact Paul Mewett on +44 (0)20 7865 2158, .(JavaScript must be enabled to view this email address); or Michael Stannard on +44 (0)20 7865 2141, .(JavaScript must be enabled to view this email address). Or visit our Internet Intelligence web page for further information.

Image: (CC) Twitter screen: Andy Melton. Qantas jet: (CC) Ken Hodge

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* Read more posts on risk
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* Chris Brogan’s advice for companies on how to use social media in business