Social networks and reputational risk: a boardroom issue?

According to the third annual Deloitte LLP Ethics & Workplace survey, 58% of executives agreed that the reputational risk of social networking should be a boardroom issue. However, only 15% said that it is being discussed at this level. These findings were presented in a press release issued by Deloitte on August 17, 2009.

Sharon Allen, chairman of Deloitte LLP, said, "Activity in these online communities can have an extraordinary and far reaching impact. That's why it is important that the potential reputational risks associated with sites like Facebook, Twitter and YouTube become an agenda item in today's boardrooms."

The majority (65%) of executives who agreed that such reputational risks should be a boardroom issue also said that they use social networking to build their company's brand. Only 27% said that they regularly discuss how to leverage these sites, while at the same time mitigating the risks involved.

Allen said, "Though social networks can be used to build business, they can also prove to be detrimental to brands." As Allen noted, conflict can result from the use of social networks: "The social network used to build business may be the same place where the business's reputation is harmed." To avoid such conflicts, Allen recommended, "Setting usage guidelines as well as establishing a values-based ethical culture ... [as] steps leadership can take to encourage employees to make good decisions online."

Allen said further, "With the explosive growth of online social networks, such as Facebook and Twitter, rapidly blurring the lines between professional and private lives, these virtual communities have increased the potential of reputational risk for many organizations and their brands. Whereas the decision to post videos, pictures, thoughts, experiences and observations is personal, a single act can create far reaching ethical consequences for individuals as well as employers. Therefore, it is important for executives to be mindful of the implications of this connected world and to elevate the discussion about the risks associated with it to the highest levels of leadership."

The complete results of the 2009 Deloitte Ethics & Workplace...