As a member of TechAssure, we help author and distribute a great newsletter designed for technology companies. I am “reprinting” an article from the most recent edition of the newsletter.

Contributed by Kirstin Simonson
Travelers Underwriting Director, Global Technology

As more and more adults embrace social media, the upside for business is a new way to get their message out. The downside, however, is an increased exposure to liability that many companies may be unaware of until it is too late.

Today, companies are discovering that YouTube, Twitter, Facebook and other sites have reached beyond their original teenage audiences and have become an at-work pastime for many employees. A recent survey conducted on behalf of Travelers found that close to half of the adult population uses social media. One out of eight respondents said they post work-related information on social media web sites, and 30 percent feel such postings are acceptable as long as they believe the information is true. In addition, 75 percent said they were “not at all” or “not very” concerned about online postings causing professional damage.

Unfortunately, the risks from cavalier use of social media are real. Already companies have had to defend themselves against defamation lawsuits from postings by employees, even when such activities were not within the scope of work and violated policies about personal use of company computers. One health care clinic was sued after an employee posted information from a medical chart about a patient’s treatment online.

How can insurance and risk consultants help companies mitigate the risks they face from their employees’ online activities? By encouraging them to follow a three-step plan:

1. Understand the potential exposures. Damages may result from legal liability for defamation, harassment and privacy violations. Or they may involve the leak of proprietary information and trade secrets that can undermine a company’s competitive position. A third area of risk is damage to the reputation of a company through false or disparaging postings.
2. Establish policies to manage exposures. Create policies and notify employees regarding expected conduct related to social media sites including blogs, email, instant messaging, tweets and other technology tools. The policies should include clearly described consequences for violating guidelines. Once in place, the policy should be enforced uniformly and consistently.
3. Prepare for the unexpected; seek advice on how to manage your risk from a cyber liability expert. Businesses should work closely with their insurance agent to evaluate their cyber risks and reputation management exposures. Development of a crisis management plan to handle incidents as they arise is recommended. For example, identification of strategies for managing negative publicity and removing false postings from social websites may be included in the plan.

By following a game plan of identifying risks, creating effective policies and planning in advance for problems, a company can create a culture of awareness about the drawbacks that come with the careless use of social media. Insurance and risk consultants can partner with businesses to help them embrace the upside opportunities of social media while protecting themselves from unexpected liabilities.

This article is only for the informational use of the reader. Information contained herein is not intended as, nor does it constitute, professional advice and it is not a representation that coverage does or does not exist for any particular claim or loss scenario.

This entry was posted on Monday, January 4th, 2010 at 1:40 pm and is filed under Risk Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.