Establishing supervisory authority over corporate social media communications and creating a reliable way to store these data files is essential to compliance in the financial services industry.
However, addressing these regulatory challenges is only the beginning of the risk management process. Companies can benefit from taking a proactive role in identifying risks and working to develop solutions for their current social media strategy.
A number of risks associated with social media can be sources of concern for companies, which makes social media compliance critically important.
Some of the most common legal risks inherent in corporate social media postings include:
- Copyright violations by staff members in an official or personal capacity.
- Leaks of proprietary information on the part of current or former employees.
- Data exposure due to hacking of social media sites or employee error.
- Insider trading issues arising from private messages exchanged on social media sites.
- Unauthorized release of research data and other unofficial information on social media sites.
- Distribution of pornography by staff members on or off duty.
- Suspected terrorist activity by members of the staff communicating through social media networks.
With the convenience of mobile technology and its integration with social media networks come the potential for serious risks to the public reputations of unwary companies. Employee activities performed with or without the knowledge and consent of the financial services firm can present serious threats to the company’s image and may even impact the profitability and value of shares for some high-profile companies.
Threats to brand reputation in the social media environment include:
- Illegal activities on the part of employees may include the release of confidential information, the possession or dissemination of child pornography or other illicit materials, the use of corporate resources in committing a crime or engaging in harassment of others through social
- Retaliatory or negative comments made to members of the public in response to unfavorable reviews or bad publicity can lead to a negative impression of the company in the public eye.
- Employee use of mobile devices to access social media sites can also represent a major threat in the workplace. The potential for harm is just as great on these devices, but monitoring may prove problematic or impractical for financial services firms.
- Accidental release of corporate information in the social media environment can sometimes create both regulatory and public image problems for unwary companies in the financial services sector.
Protecting Sensitive Data
Establishing a social media policy that prohibits the release of sensitive client information or financial data through any social media channel is critical to avoiding legal liability for unauthorized disclosure. Social media channels cannot be considered secure methods of transmission and are common targets
for identity theft and false impersonation crimes.
Educating staff members on the appropriate and secure ways to use social media can prevent serious consequences for financial services firms. General training and educational courses should be provided for all staff to ensure that they understand the ground rules for personal and public social media interactions.
In general, employees should be encouraged to put the company’s best foot forward in all social media situations and to limit their discussions of specific financial transactions and trends in these technological communities.
Financial services firms can avoid many of the inherent risks of social media interactions by restricting official social media communication privileges to a few individuals who have been given specific training. Established and enforced social media policies and advanced technological monitoring of social communications can also play a role in managing the potential threats from social communication through these channels.