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Volume 31, Issue 4

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Social Business: What It Means To Your Risk Profile

10 Issues Social Media Presents

Social media is a compendium of many highly accessible media – corporate blogs, video-sharing sites such as YouTube, social networks like Facebook, microblogging tools such as Twitter, rating/review sites (e.g., Yelp, TripAdvisor), wikis that allow many authors to simultaneously edit and create a source of knowledge and crowdsourcing, among many others. These media leverage the power of the internet, Web 2.0 and mobile technologies to facilitate the creation, exchange, use and modification of user-generated content. The convergence of these technologies has significantly altered the dynamics of customer relationship management, marketing and corporate communications for many businesses.

Business-to-people communications and social media peer groups have emerged as a new model for connecting with markets and customers directly and efficiently. Companies ignore this model at their own risk. These mediums set terms for interaction, requiring organizations to contribute value-added content and transparency in an environment where customers and other parties drive the dialogue and demand a genuine level and quality of communication. Organizations that fail to harness the potential value of social networking run the risk of becoming laggards as they cede to competitors the ability to brand their products and services distinctively in the public eye, as well as obtain continuous improvement insights.

Social media sites enable companies to listen to and learn from satisfied and dissatisfied customers regarding their ideas, experiences and knowledge, and they offer businesses an opportunity to reach out and proactively respond to extreme views and reactions. In addition, social media is providing opportunities to product development teams to share roadmaps and obtain early input from potential buyer groups on new product plans. On a near real-time basis, marketing can test and learn which messages work best, and companies can educate and inform customers by engaging them on many topics around product uses and applications.

While these developments are presenting significant opportunities for companies to connect with their customers and others, they are creating a whole set of new issues. The following are 10 examples of risks: