Risk Focus: Reputation

Gear Up for Social Media Battles

Evolving technologies and strategies help companies guard against the ravages of social media attacks. 
By: | February 20, 2018 • 6 min read

In this increasingly technologically advanced world, it seems that no one is immune from the reaches of social media.

With nearly 2.5 billion social media users worldwide, it’s more likely than ever that a company could see its hard-earned reputation shattered overnight.

Worse still, a recent Grant Thornton survey found that companies are massively exposed, with 59 percent of respondents saying they don’t carry out any form of social media risk assessment.

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Because of the unpredictability and speed at which reputational damage can spread on social media, risk managers and companies need to be proactive and have a plan in place should the worst happen. But in doing so, they need to first consider all risk mitigation and transfer options available, including artificial intelligence (AI) and algorithms.

Dealt with properly, an incident can be turned around and potentially even enhance a company’s reputation. But handled badly, it can result in millions of dollars in lost sales and severely damage a company’s share value.

“The danger of not having a plan to manage reputational risk on social media is that if something negative is posted about your organization, before you know it, it has gone viral, causing untold damage to you and your brand,” said Elizabeth Carmichael, president of Carmichael Associates.

Reputational Risk Dangers

Reputational risk on social media has undoubtedly been heightened by the rise of fake news, making it increasingly difficult to distinguish between fact and fiction, said Steel City Re’s CEO Nir Kossovsky. It has been exacerbated by a growing sense of anger and frustration among large swaths of the population, he said.

“There’s sometimes a temptation to be dismissive of an initial social media attack, especially if you consider it unjustified or the source is not credible,” he said.

“But that is no longer acceptable given the blurring of lines between real and fake news and the speed at which fake news can travel.”

Anthony de Fazekas, head of technology and innovation, Canada, Norton Rose Fulbright, Toronto, Canada

Failure to tackle the problem can often worsen the situation, said Anthony de Fazekas, head of technology and innovation, Canada, with Norton Rose Fulbright. That is because inaction can be seen as an admission of guilt, he said.

“This can impact your claim as well,” he said.

“In the courtroom, if a party takes no action for what is considered a ‘long time’ in social media time, despite having knowledge of a defamatory statement, the defendant can hold up their inaction to suggest that, if the statement was untrue, more should have been done.”

The result can be millions of dollars in lost revenue and customers, and ultimately a tarnished reputation, said Chandra Seymour, senior vice president with Marsh Risk Consulting’s strategic risk consulting practice. The only sure way of addressing that, she said, is to get out in front of the problem.

“Tackling the issue proactively is the only way to ensure it doesn’t get out of hand,” she said.

“Reputation typically accounts for 30 percent of a company’s stock price and getting it back can be much harder than had you taken proactive steps to protect it in the first place.”

Randy Nornes, executive vice president at Aon, said that the first step a company should take is to identify risks that might lead to dissatisfaction among stakeholders. The company should then create a plan for how to tackle the problem should it arise and regularly monitor social media for commentary about the company, he said.

“What most organizations struggle with is identifying someone to be responsible for monitoring and managing that particular risk,” he said.

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“Then they need to determine what the escalation process is if something does happen,” he added.

Chuck Saia, CEO, risk and financial advisory for Deloitte, said that leveraging advanced analytics can help companies weed out negative social media. Simulating a hypothetical ‘what if?’ scenario also can help detect reputational threats, he said.

“As a best practice, these ‘wargames’ should be conducted at least twice a year, not as a pro forma exercise, but as strategic opportunities to improve the organization’s overall reputation and resiliency.” — Chuck Saia, CEO, Deloitte Risk and Financial Advisory

“Typically viewed as a cyber risk management exercise, these simulations should extend to address all potential threats on reputation, brand and value,” he said.

“As a best practice, these ‘wargames’ should be conducted at least twice a year, not as a pro forma exercise, but as strategic opportunities to improve the organization’s overall reputation and resiliency.”

Artificial Intelligence

A recent Deloitte survey found more than half of companies plan to address reputational risk by investing in technology such as analytical and brand monitoring tools. Boards also are beefing up their in-house PR and social media monitoring capabilities, it said.

One possible solution is Artificial Intelligence (AI), said William Atak, reputation expert at SafeOnNet. Atak said AI can be used to detect potential and upcoming crises, as well those that happen suddenly. This may include the use of robots to promote positive stories online, at the same time suppressing unwanted or negative news, he said.

“You can use AI to monitor and warn companies alike — in that way, you can prepare yourself when other companies are in or about to enter a crisis situation,” he said.

Chuck Saia, CEO, Deloitte Risk and Financial Advisory

“In the future, you will get more advanced tools to handle these kinds of situations, as the robots get better at detecting positive or negative outcomes.”

Marcus Smith, vice president for reputational risk at Polecat, said that algorithms can be employed to identify and track emerging reputational risk in real time.

Companies can then use that data to tailor their risk management strategies accordingly, whether related to the workplace, employee safety, company share price or upcoming financial results, he said.

“The most prominent example of this was with Uber when a social media campaign was started, urging users to boycott the service after the CEO was accused of sexual harassment in the workplace,” he said.

“But thanks to the use of AI, stakeholders were able to get a sense for how deep public dissatisfaction was going to be, which ultimately led to the CEO’s departure.”

Furthermore, said Dan Zitting, chief product officer at ACL, AI can be used to identify and classify certain sentiments into categories of severity. As the algorithms and models become smarter, they can classify larger volumes of data faster, he added.

“By using natural language processing and machine learning to look at a body of text, posts or Tweets, you can quickly identify certain sentiments and categorize them in terms of potential maliciousness or events,” he said.

“Monitored over time, you can then see where spikes start to emerge and gear your program toward dealing with those.”

Holistic Approach

While AI is undoubtedly a key tool in any risk manager’s armory, companies need to take into account all forms of risk transfer and mitigation when dealing with reputational risk, said Kossovsky.

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“Companies need to be prepared in advance with strategies for pre-empting and responding immediately and forcefully when social media is weaponized against them,” he said.

“They need to adopt an integrated approach that includes risk mitigation, financing and transfer that tell a compelling story to stakeholders and indemnifies any potential targets within the organization.”

Seymour added: “A lot of firms are still trying to get to grips with social media risks. For many, the biggest challenge is just the sheer volume of data and how to handle it in an appropriate manner.” &

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]