Is it necessary to take out social media insurance for your company?

Posted by Kieran on 24, January 2012 with No Comments

There are many risks associated with using social media. Chartis insurance actually provide social media insurance. I’ve provided a list of these risks below. The risks do not, however, outweigh the opportunities associated with using social media effectively. In this article I provide a list of the risks and the associated actions you can take to mitigate against those risks. Some examples of the risks are:

The exposure of sensitive information due to negligent or intentional security breaches.
Social media can damage a company’s reputation due to the comments or actions of clients, customers or staff.
Social media tools can be used for the harassment and bullying of employees.
If not moderated social media sites can be used to publish defamatory content about other companies.
Claims can be made regarding discriminatory hiring and firing policies due to the use of information found on social media sites.
There is a risk of violating the Genetic Information Non Discriminatory Act (GINA).
Wrongful termination claims for decisions and policies that may violate national labour relations act.
There can be unfair insurance /trade practice exposure for inappropriate or unauthorised endorsements or testimonials.
There are certain geographies and industries with specific regulations associated to social media.
- e.g. Financial services: the FSA update released June 2010 was in response to analysis carried out by the FSA on 30 Twitter and Facebook accounts belonging to FS companies as well as behaviours of individuals in FS discussion forums etc. I got a notification about a FINRA announcement regarding social media guidelines back in August this year where the guidelines over in the US are being clarified as companies struggle to update their systems to be compliant. As you are aware the compliance requirements are pretty severe.
- e.g. Pharma in the UK: The UK’s Code of Practice regulator has issued guidance on social media and other digital communications tools.

These are serious risks with some very serious consequences. Not engaging in social media will only amlify the issues. If you are aware of the conversation then you can participate in the conversation. Sometimes setting the record straight publicly is the best approach. On other occasions a private message with reference to legal consequences is the more appropriate way of dealing with the issues online. So how do you know when your staff should get involved in online discussions? How should they get involved? and who within your company should do it? There are some basic steps that companies can take prepare and mitigate against these risks. These include the following steps:

Educate staff on how to use social media sites in line with the company’s (industry’s) social media policies/guidelines.
Review and monitor changes made by regulatory bodies and ensure that internal social media policies are compliant with the latest guidelines.
Manage and review moderation and redundancy policies for social media channels used by the company or company’s employees.
Ensure that external moderation policies are integrated with internal procedures e.g. have clearly defined scenarios for engaging the legal department, HR, customer services, PR etc.
Ensure that the crisis management policies are well understood by all key stakeholders and review before key company campaigns/events. E.g. Microsoft’s windows 7 phone launch and subsequent bug fix releases including “no do”.
Ensure that monitoring is prioritised and that the individuals monitoring have the training to configure the search terms and the knowledge to interpret and process the findings received from the monitoring tool. A good example of a proprietary monitoring tool is Sentiment metrics.