CEOS Say Social Media Presents Risks
They may not have figured out exactly how to use it for marketing, but the bosses of big companies are plenty aware of social media, especially when it comes to the risks it presents to their businesses. That’s according to a new survey of 192 U.S. CEOs performed by Deloitte & Touche and Forbes Insights, which found that 27% of CEOs predicted social media will be an area of growing risk in coming years.
There are a few potential kinds of risk associated with social media, including a security risk (e.g., employees posting sensitive information about the company) and a public relations risk (e.g., dissatisfied customers or advocacy groups going after the company or its brands). Both have been amply illustrated in recent years, especially the latter: just think about the fake BP Twitter account, “United breaks guitars,” or “pink slime.”
Henry Ristuccia, a partner with Deloitte & Touche and co-leader of Deloitte’s governance and risk management services, stated: “Social media wasn’t even on the radar a few years ago, and we’re now seeing it ranked among the top five sources of risk, on the same level as financial risk. The rise of social media is just another contributor to the volatile risk environment companies are being forced to navigate.”
Indeed, the scope for social media to affect business seems to keep growing, influencing everything from consumer goods to heavy industry. Recently Bloomberg reported that Lynas Corp., an Australian rare earths mining company, has run into determined social media opposition over a new rare earths processing plant in Malaysia. Local residents, concerned about radioactive byproducts, used social media to stop the Malaysian government from issuing Lynas a refining permit, leaving thousands of tons of raw material piling up at its Australian mines. The effort included a Facebook group with 40,000 members.
Lynas CEO Nicholas Curtis told Bloomberg: “I’d have dealt with the emerging community debate by the social media a little bit more intensely, a little bit earlier,” adding, “We probably didn’t recognize the power of the social media to create an issue.”