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COMMENTARY: Risk, opportunity in social media


It's pretty hard to look at any sort of business publication, blog or newsletter these days without seeing discussion of the various implications of social media.

And, as is suggested by the nature of many of those discussions, from a risk/benefit perspective the rise of social media is a double-edged sword for many organizations.

While many companies still are feeling their way into how best to use these new communication vehicles, they're widely seen as presenting opportunities galore. At the same time, though, they're perceived as presenting companies with a host of potential exposures in such areas as information security, reputational risk and employer liability.

In fact, I think, for most risk managers the social media sword appears largely to be a single-edged instrument, fraught with peril but with little potential benefit.

A survey of European risk managers released last month by the Brussels-based Federation of European Risk Management Assns. and the London-based Institute of Risk Management showed the extent of their concern over social media exposures.

Nearly half of those surveyed cited social media-related reputational damage as the top digital risk facing their companies. In a statement accompanying the survey results, Michel Dennery, vp of FERMA and deputy chief risk officer in the audit and risks division of Paris-based GDF-SUEZ S.A., noted that the social media universe is one companies—and their risk managers—will have to learn to navigate.

“Companies have to learn how to live in this new environment where information is available immediately anywhere, where private and professional life is merging, and where the balance of authority is shifting,” Mr. Dennery said.

I think one of the most exciting ways the benefits of social media can manifest themselves for risk managers—as for professionals in other business areas—is through social media's role as a sort of collaborative forum, allowing participants to share and leverage information to their mutual benefit.

More LinkedIn groups focus on risk management and alternative risk transfer topics, and more people involved in various aspects of risk management and insurance are finding Twitter a viable way to share useful information, 140 characters at a time.

And brokers and insurers are increasingly reaching out through social media. Examples in recent weeks include the Chubb Group of Insurance Cos. launching its site as an online resource for risk managers. Meanwhile, Willis Group Holdings P.L.C. started its WillisWire blog to allow the broker's various experts to share their views on risk issues.

Social media also are showing potential as an important tool for businesses in crisis communications. A striking example of the possibilities is the Twitter experience during the August East Coast earthquake: People who track such things found tweets about the quake outpacing seismic waves as both raced outward from the affected areas.

It seems clear that the rise of social media offers a potential benefit edge for risk managers. You can find me in the Twitterverse at @BusInsRZolkos.