Social media’s importance for businesses is constantly being touted. But now a new study warns of the risks this relatively new form of marketing and communication presents.

Entitled Guarding the Social Gates: The Imperative for Social Media Risk Management, the report was conducted by Alan Webber, Charlene Li and Jaimy Szymanksi for the Altimeter Group. The research firm said the report will become an annual, updated online survey and assessment of this subject.

Steps Against Social Media Risks

The report cited actual social media incidents, such as an unauthorized leaking of company material, and an inappropriate customer service response that resulted in a visit from a regulatory agency. It categorized the risks from social media as damage to brand reputation, which is the biggest risk; the release of confidential information; legal, regulatory and compliance violations; and identity theft or hijacking.

Social media strengths that make it powerful for marketing and sales can, on the flip side, become a unique set of risk-enhancing attributes. These attributes include the potentially huge reach of the platforms involved, the speed at which information can travel, and the lack of control by the company.

The report noted that, while nearly two-thirds of companies understand that social media is “a significant or critical risk to their brand reputation,” 60 percent of companies either never train their employees about their related corporate policies, or do so only at hiring.

The report recommends several steps for companies to safeguard their brand reputation, protect information and intellectual property, and mitigate legal actions. These include identifying social media risks, assessing and prioritizing those risks against limited resources, managing the risk, and evaluating emerging risks.

Risk ID, Strategies

For risk identification, the report noted that “almost every company” it interviewed used some kind of social media listening platform, such as Radian6 or Crimson Hexagon. Some companies engage in brainstorming sessions to see if other companies’ reported social media crises could happen to them.

The study found that some companies do not assess risks until the crises present themselves, while others, especially those in regulated industries, take a more active, structured approach to risk assessment. Mitigation strategies include polices, compliance technologies and employee training.

For the report, Altimeter survey 92 professionals from various industries who said that social media risk management was either their primary job role, or a significant part of their responsibilities. Additionally, qualitative interviews were conducted at 36 companies of individuals in such roles as social media managers, compliance officers, Chief Security Officers and others.