This presentation is for Chartered Accountants on Web 2.0. It discusses the opportunities offered by social media. Risk and management of risk of social media is discussed.

1. Web 2.0 Value and Risk
Perspectives
Dr.K.Prabhakar,
Professor,
SRM University
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2. What is
this
place?
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3. A
Bank !
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4. Tool or a Medium
Web 2.0 and Social Media
changed the way in which
we connect with each other
and create value. It is a tool
or medium?
https://www.youtube.com/wat
ch?v=QUCfFcchw1w
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5. The three questions
and Neuroscience
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6. Questions :Global and Local
Issues
 US Elections
 Corporate Frauds and Fines- HSBC
 Ponzi Schemes
 Crony Capitalism
 Banks
 Pharma Companies-For profit
hospitals-For profit educational
institutions (PISA)
 Dishonest Claims
 Farmer’s Suicides
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7. Why behavioral pattern repeats? What
is its impact?
 Ponzi Schemes are still in vogue.
(1990’s Fixed Deposit Frauds to Emu
Poultry)
 Tax Frauds.
 Governance.
 Convicts are benevolent philanthropists.
 We stopped believing the
“Manufactured Voice”.
 We started believing “people”- who talk
in “Human Voice”.
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8. Do you think there is place for
honesty and integrity
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9. Social
Capital
Balanced
scorecard
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11. How?
 Collaborate together
(Wikipedia, Facebook, Linkedin, Slideshare…)
 External Partners (Ground Zero: US
Presidential Election- Environmental
Sustainability, Gender issues, Ethics, Justice)
 To create re-usable knowledge , design and
processes
 To meet market needs
 Through a business model
 Trust and Culture work as binding force.
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12. It is no more Stakeholder
Corporation.
 The Vision, Mission, Objectives –
People ignore if we do not practice;
Business models are obsolete if we do
not incorporate People’s Voice not
over used voice of customer.
 People include every one
Stakeholders+ Everyone= Society=
Business in Social Era.
 People organize themselves differently
enabled by technology.
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14. Welcome to Social Era
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15. People Organize in a Flash
Occupy Wall Street
Anna Hazare
Middle East Revolution
Justice Katju Comments
Tweet postings
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16. Ethics and Values Driven
 Wikipedia
 MOOCs – www.coursera.org
 Marijuana and medicinal properties
 End of consumerism- the average
American car life- sustainable
consumption
 Neuroscience based learning
 Importance for scholarship
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17. RISK
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19. Changes from Tangibles to
Intangibles
The economy has changed.
The changes have occurred due
to a shift in value from tangibles
to the intangibles.
 The economic landscape of the
present and future is no longer
shaped by machines, materials
and labor but by
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relationships, information, techn
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20. Welcome to the Intangible Economy
 On the consumer side, we consume and
create more and more content-based artifacts
of information and entertainment.
 On the supply side, intangible assets such
as, human capital, relationship
capital, structural capital and strategic capital
have become major determinants of a
companies’ performance and value. The
creation and influence of intangible capital is
now the source of a new economy.
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21. Weightless World
 The Social Era has created a shift to the
intangibles and it will be long-lasting. It affects all
sectors and all aspects of the economy. We live in
an “weightless world”, where an ever increasing
shares of GDP resides in “economic commodities
that have little or no physical manifestations”.
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22. Intangible Assets
 The recognition of the weight of intangible
assets is not limited to brands as given by the
brand valuations.
 Intellectual property –
patents, trademarks, human, relationship, stra
tegic and structural capital – is considered a
critical competitive weapon for today’s leading
organizations.
 Yet traditionally strategic development has not
even begun to approach the value of such
intangibles.
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23. Shifting of Markets
 Markets Are Shifting
 The Social Era implies a change in the nature of
markets. It is not grafting or suffixing social to
past strategies. Think Social.
 Separation between work - leisure, home - work-
place, intermediate good - final output, consumer
– producer disappearing.
 This is not a temporary shift it is permanent.
 At the core of business in the Social Era is the
recognition and emphasis of intangible capital as
the core for creating, sharing and improving value
continuously.
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24. Some Expert Opinion
 Social media is recognized as the fourth-largest
source of risk over the next three years, according
to a recent report from Deloitte and this puts social
media on par with financial risk. (“Social Media
Risk Is Like Wildfire. Where’s the Fire Engine?“ Kasia
Moreno; Forbes Insights, “Aftershock: Adjusting to the
New World of Risk Management.”)
 Executives interviewed for the report indicated that
the social media risk is rising; cyber attacks, breaches
of confidentiality, fast-spreading malicious rumors
about the company, as well as financial disclosures.
 “Everybody is walking around with a smartphone, and
things can be captured and digitized instantaneously.
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25. How Executives React
 A higher percentage of executives (37%)
from the consumer and industrial
products industry placed social media
among the top five sources of risk than
did executives from the technology
sector (24%) or life sciences (18%).
Clearly, the consumer products
executives recognize that using social
media for marketing to consumers puts
them at risk of damage to their
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reputations.

26. Definition
 Risk management is the
identification, assessment, and
prioritization of risks (defined in ISO
31000 as the effect of uncertainty
on objectives, whether positive or
negative) followed by coordinated
and economical application of
resources to minimize, monitor, and
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control the probability and/or impact
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27. How to Manage?
 The strategies to manage risk typically
include transferring the risk to another
party, avoiding the risk, reducing the negative
effect or probability of the risk, or even
accepting some or all of the potential or actual
consequences of a particular risk.
 Most of the traditional risk associated with
individuals and corporations are tangible
risk while most of the social media risk are
intangible risk.
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28. Intangible Risks
 Intangible risks are things that are recognized but not easily
quantified. A common example is an economic intangible which
is something not easily quantified within a given theory
of economics. Social media activities contain risk of intangibles
such as:
 Customer good will, employee morale, market sentiment and
aesthetic appeal (i.e. negative reaction to a twitter post).
 Positive or negative conversations online that effect the
perceptions of trust or quality
 An expenditure of time and effort on an activity by a person (such
as leveraging know-
how, knowledge, collaboration, relationships, systems, and
process)
 A defensible legal property right conferred by a Legal Act
(copyright, trademarks, patents, designs, customer lists), or
financial transactions (R&D, goodwill, intellectual capital)
 In business, intangibles are commonly referred to as intangible
assets or intellectual capital
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 Leadership, maturity, team chemistry, network effects and others.
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29. Examples of Measurement of
Intangibles
 Booms and Busts
 Bears and Bulls
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30. Behavioral Analysis of markets
 Study of market psychology- not individual
psychology posited to markets.
 Data output created by human reaction to greed
and fear thresholds is measurable.
 Future market can be predicted for hours, days
and years.
 Human beings are to repeat both positive and
negative behavior exhibited by past generations. (
Even after Emu we still have problems of Greed)
 Traditional cycle is too long. Shorter ones are
represented by fractals/recursions.
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31. CROWD of a FEW
 Managing the risk of intangibles is new ground for
most risk managers. Managing the risk of social
media is not even in the job description for risk
managers. None of the insurance brokers or
insurance companies have “social media risk
management practices”. In other words there is a gap
of “knowledge inventory supported by knowledgeable
resources on the subject matter”.
 Given the rapid state of change surrounding social
media practices, the risk are likely to increase over
time. Maybe it is time that a “crowd of a few” form
and collaboratively begin to address these issues on
behalf of the many. The emerging risk of a
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transparent marketplace of conversations can only be

32. You are the Crowd of Few
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33. Thank you
 Questions
 profkprabhakar@gmail.com
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