The business climate has completely changed in the span of a few years. Social media platforms are both necessary for marketing and customer support operations, but they also create risks because companies can suffer from reputational damage before executives even realize a problem has occurred. Because of the potential for negative comments to spread like wildfire on social media, businesses need to actively manage these risks and embrace these networks’ capability to alert them to other organizational disruptions.
Before the rise of social media, reputation risk management was not a significant priority for most organizations because the chances that one angry customer could take down a large corporation were fewer. In fact, the role of risk management has changed in enterprises, according to Forbes. Many executives are placing this concern at the front and center of their strategies. Risk management has been converted into a critical component of business decision-making.
Social media both exacerbates risk and helps companies protect reputations
Whether companies actively engage in social media marketing or not, it’s highly likely their customers maintain a presence on these networks. Even if a business doesn’t have a social media strategy, there is no guarantee consumers aren’t discussing the brand online.
Social media exposes many different types of businesses to potential risks, from supply chain disruptions to customer service problems with financial institutions. In fact, banking industry regulators are trying to design new regulations around institutions’ social media use, American Banker stated. Some financial service organizations utilize social media for customer support and regulators do not want to interfere with the expansion of client service. However, social media continues to evolve faster than regulation can keep up.
Organizations need to account for social media in risk management strategies as well as incorporate social media analytics to prevent risks of reputational damage. Companies need to stay ahead of customer complaints and brand issues because recovering reputation after an incident occurs is no longer an effective strategy. For example, enterprises that have supply chain links in politically unstable countries can monitor activity through social networks, which can allow them to establish contingency plans in the event of a business disruption. Since supply chain interruptions can be costly and bad for reputation, companies need to do what they can to minimize this risk. Social media monitoring helps organization be informed in advance.