2012: The Year ERM Goes Social

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In a recent Forbes' blog entry, LRN CEO Dov Seidman shares a concern he heard from a fellow CEO: “There are times I wonder, ‘Will I be the next Mubarak?'”

The worry seems a bit overblown on first glance; after some deeper consideration, however, it seems right on the mark. After all, the era of the social organization is upon us. Social media, mobile technology and ubiquitous connectivity are knocking down previous hierarchical structures and boundaries that separated different “levels” of employees and also employees from customers and other external stakeholders.

In fact, next year is shaping up to be one where the organizational social revolution hits full stride in many, if not most, companies. More than two-thirds of companies surveyed by Towers Watson plan to increase their use of social media tools over the next 12 months.

“The way companies handle employee communication is fundamentally changing, largely due to increased expectations, diversity and globalization, as well as the growth of social media and networking,” notes Kathryn Yates, global leader of communication consulting at Towers Watson. “Change and communication professionals can no longer do things the way they've always been done. There is a greater need than ever to deliver information to employees in a manner that creates a sense of community and motivates change.”

The social transformation also creates a sense of unease among risk managers: How can a much more unfettered flow of information inside and outside the organization be managed in a risk-intelligent way?

Companies have already demonstrated an ability to manage social media in a risk-ignorant way. One well-known retailer, for example, strongly considered installing wireless and cellular jammers inside its stores to prevent shoppers from using their smart phones to compare prices. “Why on earth would a customer want to step foot into a store with that approach,” asked the retail consultant who told me of the (aborted) plan.

Social media adoption presents organizations with new and tough decisions – but these are decisions that require the same fundamental approach to risk management. It's not about the technology, of course, it's about the way companies use the technology to achieve their objectives, manage risk and, ultimately – as Sediman points out – behave.

I'll take a closer look at a risk-intelligent approach to managing social media policies in my next entry.

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GRC expert Eric Krell supplies the Business Finance community in-depth articles and commentary examining governance, risk, and compliance.

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