Online conversations, powered largely by social media platforms but also taking place in dark corners of the web, are increasingly risky not only for the reputation of a business but their very livelihood. This growing area of risk must be adequately considered and catered for, with tooling and systems put in place to mitigate fallout and stop damaging discussions going too far.
The unprecedented impact of social media
In today’s world, social media has become woven into the fabric of our daily lives, used to communicate, engage with content, and influence opinion. However, what began as a light-hearted way for people to share with others now has the potential to boost or destroy a business or brand in rapid time.
With the ability to amplify messages instantly and magnify their reach across millions of users, social media possesses a great ability to influence public opinion, brand perception, and overall business success. In today’s day and age, reputations can be made or broken with a single viral post or inaccurate reporting. And it’s not just social media, with discussions on the dark or deep web also having damaging impacts far and wide.
When seemingly innocuous actions or comments snowball they can lead to financial losses, legal entanglements, or even a business having to close its doors. Increasingly, business leaders at organisations of all sizes and industries are grappling with the complexities of the online landscape, as they look to safeguard their reputation and operations.
When the impossible becomes reality
The recent Silicon Valley Bank (SVB) story that made global headlines is a real-life example of the worst case scenario of this issue playing out.
The largest United States bank to fail since Washington Mutual closed its doors in 2008, the story is particularly noteworthy due to the role social media played in its downfall. The Santa Clara bank was shut down in March of this year by the California Department of Financial Protection and Innovation, after the company’s investments decreased in value massively and quickly.
With reported assets of $209 billion in December 2022, the bank had grown significantly between 2019 and 2022, but this wasn’t enough for mismanagement of investment and growing vulnerabilities. While various factors were at play in the demise of the bank, arguably the final straw was when many people withdrew large amounts of money in the span of a few hours, driven by social media discussions.
At the beginning of March, social media accounts began reporting on SBV’s financial health, prompting customers to pull $1 million per second from their accounts, as reported by Reuters. Overall, depositors withdrew $42 billion from the bank in 10 hours, leading to SBV CEO Greg Becker later blaming social media as a top factor in the bank’s downfall.
Responding to risk before it’s too late
While this is an extreme example, the principle of the SBV story must be considered and acted upon. Businesses from all industries, not just finance, need to pay attention to their social media presence, and the impact it may have, and take a proactive approach to risks.
In order to catch negative discussions or commentary before it goes too far, powerful tooling and human resources is an imperative investment. As the SBV story shows us, failure to put preventative and response strategies in place can leave businesses up for more than reputational damage.
The world of social media is ever-evolving, and with it the risks businesses face. By understanding the impact of social media on business risk, we can unlock the potential for growth and success, while safeguarding against the perils that lurk in the virtual world.
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