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Is Your Establishment Protected from Social Media Risk?

This feature will examine the increasing prevalence of social media sites like Facebook and Twitter, and organizations' need to insure they have satisfactory insurance coverage to address these specific risk exposures.

Current social media technologies offer new possibilities for the business market as well as individuals.  These challenges are a important issue that must be addressed. Many organizations are neglecting these opportunities and risks at their own peril. Those who assume a proactive attitude can increase their client base, promote new business and boost their brand awareness. Those who do not can be subject to negative advertising and possible litigation stemming from employee or consumer allegations. A memo dated May 30, 2012 released by the National Labor Review Board (NLRB) brings to light the increasing uncertainty that corporations deal with concerning their social media policies. It is critical that companies adequately look at their risk management policies and insurance coverage to include social media vulnerability.

In regard to employees' social media use, companies need to ascertain what types of control are suitable for their individual circumstance. Do personnel use social media as a part of their job? Are they allowed to use company resources even when posting on personal sites? In the NLRB memo mentioned earlier, many organizations were cited as using unlawful practices to control their employees' social networking activities. Many organizations were vague or too broad in the language used and the language could possibly be defined as a censorship of their free speech rights. Walmart was commended for their social media approach because they explained any ambiguous wording so as not to ignore any associate's First Amendment or state-constitutional free speech rights. Failure to enact proper controls have the potential to lead to illegal employment practices, dishonest advertising, discrimination against a legally protected status (e.g. race, gender) or transgressing of federal and state laws. There could also be more risks to those companies under the purview or oversight of a regulatory body.

In regard to business records management (RM) procedures, Symantec among other security control organizations emphasize the importance of setting up a proper retention plan to shield against risks. A article about social media risks included a statement from Gartner Group figuring that by the end of 2013 half of all corporate litigants "will be asked to produce material from social media websites for e-discovery". Omission of a secure RM policy could weaken the ability to show records mandated by the court as well as raise the probability of unintentionally releasing information that would otherwise be protected from public exposure. Development of a transparent and executable guideline can protect against legal liability or an embarrassing public relations snafu.

The public likes the ability to connect through social media so the business industry needs to respond, adjust or lose an opportunity to appreciate the great potential that comes with the expanding social media technologies. One way some organizations are taking advantage of the chance is by developing "canned" text or pre-approved topics/statements that may be posted by employees. This approach can be an effective way to initiate a proactive social media policy and support their interests at the same time.

In essence, companies need to be familiar with the risks and focus on social media policies in regard to crisis/risk management, intellectual property, client/employee privacy, and compliance with federal and state laws and industry regulatory restrictions. With the advancing use of technologies, businesses should also contact their insurance agents to confirm they have sufficient insurance coverage - some providers require special riders in order to accommodate coverage against social media risk.

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