Opening Pandora’s box: The challenge of social media in a regulated environment

Abstract

Social media dominates our business and personal lives, having rapidly reached the point of ubiquity; however, the benefits of social media are often more discussed than the risks they present to the reputations of organisations and individuals. Firms can make ill-judged decisions on the implementation of social media strategies which backfire reputationally or facilitate undetected theft of intellectual property and the facilitation of financial crime. As such, the stakes for financial services firms are particularly high. Social media usage is inevitable and often necessary so it is essential that firms implement appropriate, robust governance processes that are both proactive and capable of the rapid identification of, and response to, emerging threats. This paper reviews the broad spectrum of risks arising from social media usage, both internally and externally. It also reviews the current state of regulatory guidance on the use of social media and suggests a framework approach to social media governance to address the potential risks involved.