Social media (SM) enables two-way communication and collaboration. Organisations can (and have) utilised it to great success building a competitive advantage, generating business and engaging with their customers on a more personal level.

According to KPMG, this two way communication increases opportunities to connect with customers and prospects but also increases risk, especially as corporate regulators and bodies (such as ASIC, ACCC and the ASX) are already announcing compliance requirements and guidelines with respect to social media use.

KPMG classifies risks in social media marketing under 3 categories:-

  • Operational risk can involve copyrights, employee non-compete and confidentially agreements, monitoring employees on social media, who ultimately ‘owns’ the content you post on LinkedIn, Facebook, Twitter, etc.
  • Regulatory risk is all about ‘public-company disclosures’ and what official information is made public, when and by whom. If you tweet ‘great numbers’ before your actual numbers are released, what disclosure rules have you just broken?
  • Reputational risk may be dealing with what you or your employees say online as much as what others say about you (and how you react to that).


The noise about using social media as a means to grow your business has become so constant it almost blends into the background at this point. With Facebook, Twitter, and LinkedIn pushing their advertising platforms and Google+ touting better search optimization, it’s inescapable.

Social media offers any business tremendous upside but at the same time, if it is not managed properly, it opens a company up to enormous risk. One inappropriate tweet or Facebook post can cause irreparable damage, but should this stop companies from integrating social media into their business?

Steve Nicholls, author of the best-selling book “Social Media in Business,” (techxb.com) believes that any form of progress comes with risk and the key is to identify them and overcome them. In today’s digital culture, the greatest risk of all is not to embrace social media because your competitors will be.

Some of the major risks as outlined by different advisory companies are as follows:-

  1. REPUTATION MANAGEMENT: Social media may cause a risk to a company’s reputation by creating negative publicity. Legal issues may perhaps arise if a company gives an inappropriate comment about another company on a social media platform for instance.
  2. SECURITY ISSUES: There is always a risk of hacking, spy-ware and bugs amongst others. This means that there is a risk of having confidential company information leaked outside the company.
  3. ENGAGING IN TWO-WAY DIALOGUE AND POTENTIAL CRITICISM: While social media allows a company to interact directly with customers in real time, it also gives those same customers a public platform to voice dissatisfaction.
  4. TRUST AS PART OF THE CULTURE: In order for employees to use social media in a successful way for the company, trust is a prerequisite. Not having that trust as part of the organizational culture can present a risk when it comes to social media.
  5. WASTING COMPANY TIME: Social media can be addictive and there is a risk that employees will spend too much time on it, compromising their work and thus the organization’s business operations.
  6. NEGATIVE USERS: One of the problem with Social Media is that it attracts all sorts of people, even the negative and malicious ones. These negative elements include spammers, scammers, trolls and all other sorts of malicious individuals all out to do harm to your online reputation. These includes negative comments which, while most are truly valid feedbacks, some are just intended to spread negativities against your brand. Just as goodwill spreads fast, the changes for negative fire spread is also very high.
  7. LOSING CONTROL: What you publish online, especially through social media channels, can really go viral and spread like wildfire in the online sphere. This can prove beneficial for you if it generates positive results. On the other hand, you really have no control over what you publish online and everything is available for anyone – including negative and malicious elements online. They can use your materials to criticize you or spread erroneous information that will damage your online reputation. If not monitored well, social media can be difficult to manage- You need a powerful social media listening tool to be able to filter out relevant data for you.






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