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The Board, Social Media and Liabilities

Today, what happens in social media or more aptly, cyber space, can directly impact a board and how a company is governed. Here are just five ways your company may be impacted. Are you ready?

1. Directors Liability: A crisis, such as when JetBlue passengers were stranded for hours on the tarmac or the major oil disaster in the G u l f o f M e x i c o, often will lead to widespread public discussion online. Increasingly citizens are using social media tools to organize protests and gather information which can be used in future litigation against responsible parties. Board members need to react to crises quickly and efficiently. Monitoring social media channels can help better assess risk and potential outcomes, and permit tailored responses to real concerns.

2. Union Organizing: Unions are making very good use of social media tools. A board not paying attention to social media chatter may be blindsided by a rallying attempt at their company. One for which they could have been prepared.

3. Whistleblower Crises: It may be that employees in a company have concerns that they feel are not being addressed. Monitoring social media channels may elucidate such issues and allow management to respond before a whistleblower feels the need to go public online. Awareness of chatter on social media sites will allow companies to better understand employee issues and take appropriate and timely action before crises hit.

4. Legislative Impact: Activist groups opposed to a company’s operations (i.e. oil & gas sector) are using social media tools to mobilize communities and to build potentially damaging cases against a company. These protests can result in legislative changes that block a proposed project. Be aware of opposition demands and  citizen concerns by monitoring social media channels – this will allow you to undertake public education programmes or perhaps to alter certain practices before projects get halted.

5. Stock Price Volatility / Insider Trading Claims etc.: An individual – intentionally or not – could post information online that leads to a sell-off or drives a sudden hike in buy activity, resulting in an investigation. Before such an incident can damage your firm and /or the reputation of board members monitor what is being stated and discussed about your firm on social media sites.

The challenge to successful business is often just being aware of what people think of you – are employees content, are communities supportive and are social and environmental issues seen as being addressed? Awareness allows us to respond before crisis hits – don’t get left in the dark, embrace social media, use these channels to get your message out and listen to what is being posted.

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