December 5, 2020

PwC’s New Report Is a Good Reminder Not to be a Tool on Social Media

Now that the SEC has given public companies the go ahead to tweet material info to investors, it's an easy assumption that many interested parties will be stalking social media more than ever. So those of you tweeting about clients, Instagramming audit rooms and "accidentally" Facebooking confidential information, consider yourselves on notice.

CFO.com had an interesting analysis of one PwC report that addresses the social media "problem" facing global companies:

PwC’s Risk in Review report, based on responses from 800 global executives, found that risks related to the impact of digital technologies on intellectual property and reputation will be of particular concern for companies over the next year.

As a result, PwC found, the use of intellectual-property, reputation, and brand-value audits will double over the next 18 months among the four primary industry groups surveyed: technology and entertainment, health care, financial services and consumer/industrial, with technology-centric companies leading the charge.

Reputation audits involve scrubbing conversations taking place on social-media channels, namely Twitter and Facebook, to identify movements in consumer confidence and overall brand reputation, Jason Pett, PwC’s U.S. Leader of Internal Audit Services and co-author of the report, tells CFO. Over 40 percent of executives surveyed said social media is likely to put them at risk in the next 18 months. “They’re looking for issues going viral very quickly or trending on Twitter that might affect the brand, and actively trying to get ahead of that,” says Pett.

I wouldn't expect most companies have the advanced technology required to analyze, say, an accounting tabloid and narrow down which staff are posting salary details, sending in company-wide emails and wasting all day commenting here. And even if they did, I doubt anyone cares that much.

But companies don't need a team of trained monkeys to comb social media for them, there's an app for that:

Generally such analysis involves the use of a third-party vendor or consulting company, and the report notes it can be hard to calculate the ROI of such an endeavor because it works best when risks are avoided and thus don’t result in any cost to the company. But, Pett says, CFOs are becoming more sophisticated and involved in understanding the implications of risk on the overall business, as opposed to a singular focus on compliance risk.

“The returns are generally understood, although not easily calculated,” Pett says. “CFOs see this is as something they need to invest in, and it’s really just using data analytics and other more forward-looking strategies to get better returns with the same risk-management budget. You don’t see a lot of pushback on return because the issues that result if you’re not calculating risk properly are so significant.”

Social media can be extremely damaging for a brand — ask Epicurious — and that's undoubtedly a material event. Or it can be a win. Shouldn't someone figure out the estimated value of these wins and losses?

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