Is your board prepared for a Trump Twitter Tirade?

• Author: Chia, Doug

One of President Donald Trump's favorite Twitter targets is public companies, and as a result companies and boards face a risk that few anticipated: being in the crosshairs on social media. We call this the Trump Twitter Tirade.

Lockheed Martin made headlines when Trump took to the digital bully pulpit and blasted the "out-of-control" cost of its F-35 fighter jet program.

At Ford, market capitalization fell by $28 million after Trump took a 140-character swipe at the automaker for planning to move a plant to Mexico.

And on the flipside, a Trump tweet storm against Nordstrom--the retailer that dropped his daughter Ivanka's fashion products-actually buoyed the company's shares right after.

By using his @realDonaldTrump and @POTUS Twitter handles, President Trump has shown that almost any company is fair game for direct and unfiltered feedback from the "leader of the free world." And it doesn't matter if the tweet compliments or castigates; without a doubt, the risk far outweighs any possible opportunity. In addition to Lockheed, Ford and Nordstrom, just ask the CEOs and directors from LL Bean, Carrier, General Motors, Boeing, The New York Times, and CNN, who's organizations have also been ended up on the president's Twitter feed.

We see the Trump Twitter Tirade impacting three areas fundamental to a company's business.

A tweet reaches a company's stakeholders at lightning speed. And likewise, a company's reputation can start taking a turn for the worse at lightning speed.

* First and foremost, there's the reputational impact. A company can have a blow dealt to its brand if it appears unlikable at the hands of the president, which can ultimately affect bottom line.

* Second, consider the financial impact. Depending on how much of a punch a tweet packs, a company can take a hit to its market capitalization.

* And last but not least, there's liability. Directors and management worry about shareholders suing the company over the loss in market capitalization due to a presidential tweet.

These three risks have even had the most prepared companies seeking external help. Professional services and law firms are working with companies to either create or update their crisis management plans.

For boardrooms, some wise advice about social media attacks comes from Cleary Gottlieb Steen & Hamilton (a member of The Conference Board's Governance Center). The law firm issued a recent client memo...