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ARC: WHAT COMPANIES NEED TO KNOW TO PROTECT THEMSELVES FROM REPUTATION RISKS

Reputation risk altered by social media concerns

The flip side of social media's value in advancing a company's brand is that the speed with which messages—mistaken or deliberately fraudulent—spread through social media can quickly put organizations' reputations at considerable risk.

This is an issue that companies such as Factory Mutual Insurance Co., which does business as FM Global, Domino's Pizza Inc. and FedEx Corp. have faced in recent years to turn around negative perceptions.

To address such an exposure, companies need to engage with social media, monitor the media for troublesome messages and, when trouble does arise, respond swiftly, deliberately and via the same social media channels, experts say.

“Companies have to monitor, they have to listen, and social media is all about engagement. It's also about transparency,” said Amy Howell, CEO of Howell Marketing Strategies in Memphis, Tenn.

“We certainly believe there's a lot of value in monitoring the "chatter,' if you will, that occurs on social media,” said Shawn Ram, managing director and national technology practice leader at Aon P.L.C.'s Aon Risk Solutions unit in San Francisco.

“We believe social media should begin to enter business continuity plans. Basically, planning for a social media-related event,” Mr. Ram said. “It's common to plan for these kinds of circumstances around natural catastrophes, right? Social media needs to come into that fray now.”

“We do crisis management plans for our clients and part of that is social media,” said Ms. Howell, noting that those plans cover aspects such as who will respond to a reputational crisis and what steps will be taken.

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“It's all got to be ready to go instantly,” said Ms. Howell. “Companies have to have a plan in place to deal with it, and then they have to deal with it. And they can't wait.”

Last fall, Johnston, R.I.-based FM Global faced its own social media reputation threat during derivatives brokerage MF Global Holdings Ltd.'s financial collapse. The insurer first became concerned about the reputational issue in October 2011 as speculation grew about MF Global.

FM Global Chairman and CEO Shivan S. Subramaniam “at the time was experiencing concern that there might be name confusion and that FM Global's name might be associated with some of the things that were being said about MF Global,” said Steven Zenofsky, assistant vp and manager of public relations at FM Global.

When MF Global announced its bankruptcy, “what we started noticing as a public relations team was the more stories were being written about MF Global, the more mistakes were being made unintentionally,” said Mr. Zenofsky, who was involved in the insurer's response effort.

The reputation risk accelerated in December when, during a U.S. House Agriculture Committee hearing on the MF Global collapse, Rep. Frank Lucas, R-Okla., the committee chairman, mistakenly—and repeatedly—referred to the failed company as FM Global.

“The public relations team started responding to errors that were occurring in blogs or in the Twittersphere,” Mr. Zenofsky said. “Before long, FM Global was one of the top 10 trending topics on Twitter.”

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FM Global's team reached out through social media to anyone mistakenly associating their brand name with the financial firm's collapse. “We did it with a sense of humanness,” Mr. Zenofsky said. “Because if they're unintentionally making an error, you don't want to bash them.”

Ann Arbor, Mich.-based Domino's Pizza faced a social media reputation threat with a less innocent origin in April 2009 when two employees of a Conover, N.C., Domino's created a video of one of them engaging in various unsanitary acts with food items they claimed were being sent out to customers. They posted the video to YouTube, the video went viral, and Domino's suddenly faced a serious reputational risk.

Ultimately, Domino's responded with a YouTube video of its own featuring now-CEO J. Patrick Doyle explaining the incident as a hoax and offering the company's response.

“Now, three years later after the scars have sort of gone away, I wish we would have done our CEO's video one day earlier,” said Tim McIntyre, vp, communications at Domino's. “Or I wish we could have been more public with what we were doing behind the scenes.”

The incident occurred on Easter Sunday. “The video was posted at 4 in the afternoon and we knew about it 45 minutes later,” Mr. McIntyre said. But, he said, before the company could respond it had to find the people responsible and determine whether the video was real or a hoax. The following day, having accomplished those things, the company began crafting its social media response.

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On Tuesday, “We temporarily turned one of our employee's Twitter accounts into a Domino's Twitter account,” he said. “We decided we couldn't go the traditional route to handle a social media crisis,” Mr. McIntyre said. “It was a social media crisis, so we had to use the social media.”

When they posted Mr. Doyle's video on Wednesday, Domino's deliberately mirrored the keywords and tags used in the original video so their response video would come up alongside the offensive video in any searches. “We kind of ruined it for them,” Mr. McIntyre said.

Ms. Howell offered another example with Memphis-based FedEx Corp.'s response in December when a YouTube video of a delivery man tossing a new computer monitor over a fence went viral as another example of a company responding quickly. FedEx quickly posted its own video acknowledging the event, taking responsibility and apologizing to the customer, and communicated its response on Twitter.

“They've been criticized for the quality of that video but it was more important that they got the video out there,” the consultant said.

In each case, the companies involved used the social medium in which the threat was developing as a cornerstone of their response.

“FedEx did not issue a press release. They did not put anything on the wire. They responded in social media,” Ms. Howell noted. She said, however, her preference is to “blend all media. It's being proactive and covering all your bases.”

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FM Global's Mr. Zenofsky said, “It's interesting now if you look at the outcome. We really were able to preserve our digital footprint,” Mr. Zenofsky said. For example, the top result in a Google search of “FM Global bankruptcy” is a story about the insurer's efforts to correct the misidentification.

“These things can live forever in search if you don't move quickly to correct them,” Mr. Zenofsky said.

“People are going to YouTube to look at these videos,” said Aon Risk Solutions' Mr. Ram. “You want your response to be right next to that video.”

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