In the last six years, social media has been used by many organizations to engage directly with customers. The upside to an effective social media strategy is enormous, but so are the potential risks.

The first is reputational risk. Just several years ago, a post on a message board or website by an organization containing potentially tortious statements about a person or company would take weeks if not months to percolate to large-scale attention. But in the age of Twitter, a potentially tortious post on a site such as Facebook or Twitter can reach a massive audience in minutes. Because of the instant proliferation of these types of mistakes, there can be no tolerance for even a single major social media faux pas.

Additionally, one of your employees might use social media for their own marketing, networking or personal use, which could all give rise to a claim against your company.

For example, if your employee anonymously disparages a competitor via social media, your company may face liability for defamation if the employee’s identity is discovered. Because so many people have unrealistic expectations of privacy in their social media lives, this makes it easier for an employee to harass, insult or make libelous comments online about another employee of your company, or about a competitor, naively thinking their posts will remain anonymous and not bring liability to their employer.

The key to mitigating social media risk is to create an organizational social media policy that is both effective, yet realistic. Making sweeping demands that employees do not engage in any social media or never reveal their employment in any online capacity is unrealistic and ineffective. Instead, a better approach is to craft basic, common sense social media employee policies, and then clearly explain them to the employees. Many of your employees simply don't know what libel or defamation is, and giving them some plain language guidelines will go a long way towards preventing very basic social media disasters.

In the event your organization is hit with a claim arising from an employees social media use, your business “package” insurance or the company’s CGL policy may provide coverage for slander, libel, copyright infringement and misappropriation claims under the standard coverage for “advertising injury.” However in many years insurance companies have added exclusions to these policies and instead push customers toward stand-alone cyber-insurance policies.

To begin forming a social media risk strategy, the basic steps are clear. First, create a common sense social media policy for employees to follow. Then, clearly explain in plain english the basic do's and dont's of social media usage. And finally, carefully review your CGL policy to see if there are exclusions which would prevent coverage in the event of a claim arising from an employees social media use.

These guidelines will get you well on your way to creating an effective social media risk framework for your organization.


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