What’s Social Media?
“Social media is an umbrella term that defines the various
activities that integrate technology, social interaction, and
the construction of words, pictures, videos and audio.”
Social Media managers do not have risk management
written in their job specs…
and Risk Managers do not have enough knowledge of
social to have it on their radar.
>> Unidentified, Unaccounted for, Unmanaged Risks
Business model implications (opportunities)
Business model implications (risks)
Social Media: A Risk
Julia Graham, DLA Piper
Peter Hacker, Jardine Lloyd Thompson
Corrado Zana, Marsh Risk Consulting
Christophe Mallet, Carve Consulting
Opportunities & Threats
Business model implications
Risk challenges and opportunities
How to control risks
Taxonomy of Social Network Risks
Taxonomy of Social Network Risks
Government and Critical Infrastructures
Broadly, social media can exacerbate these political risks in four ways:
Accelerate: Social media can accelerate the formation of political protests and resistance.
Spread: The global nature of social media can enable civil unrest to more easily and quickly transition
from a single-country phenomenon to a regional event.
Target: Social media users frequently target individuals and organizations perceived as being friendly
or close to unpopular regimes, potentially leading to a loss of income for some businesses.
Deflect: Authoritarian governments may use social media to deflect popular discontent away from
political leadership and toward foreign entities or companies that may be instigating or playing a role
in fueling unrest.
Source: Social Media Adds to Political Risk Equation
in Emerging Markets. Marsh 2013
Individuals and families
Cyber Risk Register for individuals
Self-inflicted reputational damages
Back-door for bigger targets (social engineering)
Ten Deadly Sins of Social Networking
1. Believing who dies with the most connections wins
2. Clicking everything
3. Controlling your people and family but not saying why
4. Endangering yourself and others
5. Engaging in Tweet/Facebook/LinkedIn/Instagram rage
6. Mixing personal with professional
7. Over-sharing company activities
8. Password laziness
9. Privacy compliance is not just a boring stuff
10. We are not there ....really?
friend and foe
Managing Intangible Risks
Insurance and risk solutions
Social media – also a friend?
CEO Global CTM Practice
1. Social media risk landscape
1.1. What can go wrong? Potential scenarios:
Loss of control (external): customers of the corporate can publicly state
comments/opinions which damage the corporate’s brand, reputation and key
Loss of control (internal): employees publicly state comments which can lead to a
negative perception on the company, third party, or a key product/service/brand
Third parties: external third parties using a public/corporate social media
environment to express negative comments/perceptions, carry out public disputes
or even “hi-jack” the system for spamming purposes.
Data privacy/security: accidental or purposeful release of sensitive personal
customer data or sensitive corporate data (e.g. trade secrets) into the public forum
via social media channels.
2. Social media risk landscape
2.2. Key risk groupings
Breach of contract/
Network security liability
Libel, slander and
2. Insurance and risk solutions
2.1. Overview of available insurance solutions
Non-physical Business Interruption
Well structured and tailored advice (pre/post loss) and coverage (is
required to respond to the myriad of intangible risks presented by social
media. Avoidance of coverage gaps and duplications is a necessity. In
brief, stress test your existing arrangements first.
2. Insurance and risk solutions
2.2. Risk management approach
Social media – control options:
Key risk management principles:
•Guidelines: establishment of a formal
social media policy
•Auditing: conducting audits and risk
assessments across the business
Training and HR: integrate social media
policy principles into training (e.g. “common
Risk management integration: group
committee between risk management, HR,
data/IT security, marketing/
communications, operations etc is essential
3. Social media
3.1. Case study – loss mitigation
Mobile malware threat: Is not only a reality, but is growing at an exponential rate. There are
currently over half a million malware apps for the android platform in circulation
Potential scenario: a corporate has been hacked and as a result there is an interruption in
service to its customers. Furthermore, it has been publicly reported that sensitive and payment
customer data has potentially been breached.
Exposures: increased customer churn rate due to reputational damage, business interruption
(direct loss of revenues due to interruption to services), cyber liability, regulatory action, first
party loss mitigation costs (including potential refunds or credits to the affected customers) etc.
Usage of social media: to efficiently send out clear communications to the affected customer
base to inform them realtime about the incident, what the corporate is doing to rectify the
situation, and when service is due to resume. Can also be used to provide post-loss service
(and remediation) to the affected customer base. Important: communications must be timely,
Insurance and risk implications
Social Media Question: Is it social software or business benefit to society what counts?
Transparency: Business have to benefit “society”, if you” can’t beat them, join them”
Risk Landscape: Everything is connected to everything else
Losses: Major data loss through mobile devices just a matter of time
Risk and insurance management: ensuring that the evolving threat landscape is
adequately understood and the appropriate insurance/risk strategies are applied
Insurance: increasing requirement to define, quantify, and determine frequencies for
social-media related losses. Current lack of public loss data and difficulties in quantifying
exposures is limiting available risk transfer (coverage and limits). In addition, application of
integrated insurance and risk solutions can add maximum value.
Risk management: requirement to embed social media into corporate risk management
procedures (across the whole organisation) and vice-versa. Application of common-sense
principles for employees and management.
Loss mitigation: embracing social media to enhance loss mitigation procedures,
particularly the PR aspects, can lead to reduced loss severity.
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