By: Peter Steward


Many risks exist in social business covering HR, reputation, compliance, safety, Intellectual Property (IP) and more, but the perhaps the biggest risk of all is failing to leverage social business

However one views social media, one point is clear; that it is here to stay. And leveraging social media for business is a valuable and cost-effective means of accelerating business objectives. Social business is about embedding familiar or bespoke social tools into your business processes, connecting people and promoting meaningful dialogue. One powerful example objective would be to graduate from managing customers to engaging customers. Ready or not, the social business train has left the station. Leading firms have secured their place on it, benefiting from brand awareness, deepened customer engagement, improved operational effectiveness; marketing, selling and even enhancing products or services through social business. Such change is usually driven by a member of the leadership team who recognizes the value social business brings to their corporate strategy.

But before jumping on-board, we must carefully consider our approach and the associated risks. Social business must be approached with the same degree of care, preparation and planning that would be applied when launching any other channel such as bricks and mortar outlets, call centres or online.
This article looks into some of the reasons to adopt social business but also sets out to highlight and mitigate the associated key risks.

Social Business, Why Bother?
A survey of more than 3000 consumers found that customers who engage with companies through social media channels spend 20-40% more money with those companies than other customers and demonstrate a greater emotional commitment to their brands(1).

What do we mean by “engage”? This means two-way dialogue therefore a shift from talking to customers to talking with customers. Such dialogue can cover anything from crisis management, such as Toyota’s President and COO answering the top questions from @Digg’s community during a major recall, to new product suggestions, such as “My Starbucks Idea”.
But the opportunity to leverage social business does not stop there. It can be used for internal team collaboration across geographies, customer service, recruiting and of course marketing and sales.

The ultimate goal is to create strong online communities, whether internal, gated or open; which can leverage existing platforms or bespoke. Clearly, having one’s own platform instils a far greater degree of control.
According to A Armstrong and J Hagel’s Harvard Business Review article, “Companies that create strong on-line communities will command customer loyalty to a degree hitherto undreamed of and, consequently, will generate strong economic returns”(2).

Two top social business communities according to CMS Wire3 include Microsoft Answers which invokes concepts of gamification with recognition of community contribution via badges, and the SAP Community Network (“SCN”), where SAP’s Chief Marketing Officer Jonathan Becher says “SCN has more than 2.5 million active members — it’s the largest aggregation of SAP customers, experts, partners and industry thought leaders anywhere”.

Just as in the real world when communities come together for good we see engagement, creativity, progress and benefits, similarly with the collaborative power of group knowledge in online communities, the results are unlimited.

Social Business Risks
We can focus on 8 social media management processes, (as demonstrated in the Community Maturity Model below) to determine key risks embedded in such a business. The Community Maturity Model, validated across several years by specialists and members of “The Community Roundtable”, demonstrates from the context of customer engagement 5 levels of social business relationship maturity: Initial (create brand awareness), Repeatable (increase brand interest), Defined (engage communities), Managed (inspire advocacy) and Optimized (achieve return on investment objectives – note not shown here).

Of the eight processes, the first 3 are strategic and the remaining 5 are governance focused and help us identify social media risks with mitigating actions.

As mentioned in the introduction, it is imperative that any foray into social business be treated with the same thorough and comprehensive preparation and planning that would go into the launch of any other new channel such as call centres or branches. Clear governance, policies and processes must be in place to ensure all stakeholders are clear on the objectives and approved practices of social business. Many brands have been damaged through inappropriate material being posted in the public domain. High profile examples include Chrysler Autos and Ryanair staff posting ill-chosen comments via the company Twitter accounts as well as McDonalds launching the #McDstories hashtag to promote positive farmer stories which then backfired with Twitter users hijacking the hashtag as an outlet for venting frustration and criticism.

So whilst social business developments present significant opportunities for companies to connect with their customers and others, they are also creating a whole new set of risks and issues for businesses.
Here are some examples:

  • Loss of intellectual property and sensitive data – there are significant security risks which must be managed when deploying social media for business, including inappropriate release, leakage or theft of strategic information, as well as exposure of company networks and systems to viruses and malware.
  • Reputation loss – in addition to inappropriate employee behaviour there is also the risk of setting unrealistic customer service expectations, as well as lack of engagement or paying adequate attention to manage the fallout from negative messages.
  • Compliance violations – in social media there are risks of communicating data and information that violate applicable laws and regulations, including trademarks, privacy and employment issues.
  • Financial disclosures – listed firms must be particularly careful about any commentary on company performance that could impact the stock price, violate insider trading laws, “quiet periods” or other applicable security laws.
  • Human resource risk – whilst certain sites are a great channel for recruiting employees, they are equally a source for competitors to recruit your employees.
  • Safety risk – release of information about someone from the company could result in personal safety concerns.
  • Competitor risk – potential loss of market share to competitors who are better able to exploit the opportunities social media offers. Social technologies extend the disintermediating power of the Internet to disrupt established models such as the migration of bricks and mortar book stores, music stores or travel agents to online.
  • Brand hijacking – on the Internet there is always the possibility of a fraudulent third party hijacking the company’s brand without their knowledge, perhaps by unauthorized use of logos, counterfeiting or other misrepresentations. Some companies actively search and pursue all usage of their company name on social media sites to address brand hijacking as well as to identify complaints and satisfaction issues.
  • Poor management of social business – the launching of a social business presence without any participation can be seen as negative, also if the company cannot sustain momentum or keep up-to-date. The above list is not supposed to be an exhaustive list of social media business risks as each company is unique and will need to assess the risks relevant to them, as well as determine the appropriate methods to monitor and, if necessary, mitigate the risks.

Companies should develop comprehensive social business strategies and frameworks, and then ensure employees are well trained in using them. It is important to measure the changes in consumer behaviour that result, as well as top line and bottom line results, to ensure creation of real business value from social business. Finally, a parting thought. In spite of all the risks noted above, perhaps the biggest risk of all is not leveraging the opportunity that social business represents!


1 “Putting Social Media to Work” by Chris Barry, Rob Markey, Eric Almquist and Chris Brahm. Bain brief. media-to-work.aspx
2 “The real value of on-line communities,” by A Armstrong and J Hagel of the Harvard Business Review.

3 “10 of the Best Social Business Communities & Why They are Important”
10-of-the-best-social-business-communitieswhy- they-are-important-011593.php

PETER STEWARD leads Protiviti’s Strategy and Change Management practice, based out of Abu Dhabi.