The growth of reputational risk on social media

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Long before there was social media, gossiping villagers would gather on the village square to spread news about a poor unfortunate’s mischievous child, wayward spouse or aggressive bull. His or her reputational damage was limited to the number of people filling the square times the number of people they encountered while returning to their homes.

Times have changed.

2.25 billion active users visit Facebook on a daily basis, while 500 million tweets are sent each day. Once news about that mischievous child or wayward spouse has been launched to social media, there simply is no shutting it down. The story will go viral as it instantaneously circles the globe, even if the wayward husband had simply been lying asleep in the hayloft.

To understand how social media fuels reputational risk, we simply need to survey how the world has changed during the past few years.

Widespread personal devices: The ubiquity of personal devices has the potential to turn nearly every passerby into a citizen reporter or bothersome tattletale. Police departments, in particular, have experienced reputational damage because of videos and photos captured on personal devices, including their own body cameras. Almost as soon as potentially damaging images have been captured on a personal device, they are uploaded to social media platforms where people living on all seven continents can view them. What’s more, they can then pass these images along to their own followers.

The internet: There is little the internet doesn’t touch today, including reputational damage. It is has long been said bad news travels fast. It travels even faster on the internet.

Evolving standards of acceptable behavior: Words once freely spoken, thoughts once freely expressed and personal greetings once innocently shared can now blow up a person’s and a company’s reputation. Uber, Papa John’s and Tesla are just three companies for which words spoken by chief executives damaged the reputations of both the individuals and the companies. Joe Biden is only one of many recent politicians who are learning to keep their hands by their sides.

A lapse in personal and professional judgment will spread on social media like wildfire. It can be just as difficult to extinguish.

Grievance culture: Global citizens are far less likely today to grin and bear it, turn the other cheek, give the benefit of the doubt or look the other way. For better and for worse, today our fellow citizens are quick to take offense. What’s more, they feel empowered to report grievances on social media platforms. These reports can result in grievous, long-lasting reputational damage.

Lower threshold for error: The Sage of Omaha, Warren Buffett, has said, “It takes 20 years to build a reputation and five minutes to ruin it.” Today it might take two and a half minutes to ruin a hard-won reputation.

What we say and how we say it can quickly be weaponized on social media.

As an insurance professional, my No. 1 priority is to protect my clients from all risks. Today, these risks include reputational damage fueled by social media. While this includes helping my clients to transfer the risk of reputational damage to insurance products, it begins with helping them to understand the potential extent of reputational damage.

Cracks traced to reputational damage spread quickly eventually widening into a chasm. A response plan naming available resources should be in place and ready to roll out as close to a potentially destructive event as possible. As in all things, control of your narrative will be up for grabs to a wide cast of characters who are minutes away from logging into their social media accounts. A speedy response can help your company seize control of its narrative.

Rescuing a reputation can be tricky. It is no simple matter to determine how much a reputation is worth. When can you say a reputation has been fully restored? Can a reputation be fully restored?

Rather than struggling to find answers to these questions, it is preferable for a company to fully appreciate the risk of reputational death by social media and put safeguards in place.

To anticipate the risks of social media, it is best to seek the guidance of a professional risk manager. He or she will recommend steps to help minimize your risk profile, while recommending transference to insurance solutions for remaining risks.

Andrew Laurie is an account manager at KMRD Partners Inc., a risk and human capital management consulting and insurance brokerage firm with offices throughout Pennsylvania. He can be reached at [email protected].