IoDSA: Boards must consider social media as key reputational risk

A recent tweet made by a director of Cricket South Africa relating to a cancelled sponsorship highlights an issue for South African boards: the risk represented by social media. Social media have become a key communications channel, but they pose particular risks for organisations and especially their directors, says Parmi Natesan, CEO, Institute of Directors in South Africa (IoDSA).

“The bottom line is that directors have to accept that once they take up a board position, they will be seen as representing the organisation in the world of social media. The social media world has its own rules and culture, and there’s no distinction between public/professional and private roles,” she says. “Directors’ duties to act in the best interests of the organisation, with due care, skill and diligence are paramount, and it should never be forgotten that they can be held personally liable for not fulfilling these duties.”

Those using social media need to take the time to gain the necessary skills to communicate in an environment in which context is completely absent. Observations that might be unexceptionable in the real world can be perceived quite differently in the online world—and perception is everything in the virtual world. Board members cannot afford not to be proficient in social media themselves and must give careful thought to their role in the organisation more generally.

Because mishaps can cause grave reputational damage in the blink of an eye, social media should be considered in the risk management process with a corresponding policy to manage them, just as is the case with traditional media, Ms Natesan argues. Social media policy and official activity is all too often relegated to the marketing department, and seen as the preserve of younger, more junior staff members. At the very least, the board must ensure that a social media policy is in place and has been approved by the board and that all staff members and directors understand what it means for them.

A key challenge is that social media often requires swift action, so policies must be carefully crafted to provide a framework within which everybody associated with the organisation can work, with provision made for the rapid vetting of potentially damaging tweets. Ms Natesan recommends that directors should restrict their social media comments to business and financial matters of a general nature and that if they feel there is a specific issue that needs addressing, they should take it to the social and ethics committee, the board or the official spokesperson.

“Directors need to be careful that they do not break the bonds of collegiality and confidentiality that are fundamental to an effective board by speaking out on a controversial issue unilaterally,” she says.

Many social media policies also fail to provide any framework in terms of which transgressors will be disciplined. It is therefore recommended that social media policies are linked to the IT use policy and the disciplinary code.