Social media risk a learning curve for clients, brokers

Exposures demand heightened attention, additional education.

The Twitter complaint seemed harmless enough: a woman shared her encounter with a bedbug in a Toronto movie theatre, and before long, Lloyd Robertson was sharing her distress with countless viewers. The problem? That theatre was a key location for the 2010 Toronto Film Festival, and the woman’s Tweet wasn’t true.

Festival organizers weren’t the first to scramble to minimize damage after a thoughtless Tweet–and they won’t be the last. Growing use of Facebook, Twitter and other social media tools to promote brands and organizations of all sizes means that brokers–in some cases new to social media themselves–need to be extra attentive to client exposures. And in turn, the industry should renew educational efforts on the kind of coverage available for those exposures, risk experts say.

Brokers are among other first-line providers–along with lawyers–to have conversations about social media risk with clients, since the use of Twitter, blogs and Facebook has outpaced many businesses’ risk practices, says Greg Shields, partner at Mitchell Sandham Insurance Brokers in Toronto.

“Social media might be consumer driven, but risk management of social media risk, so far, isn’t consumer driven,” he says. “It hasn’t raised itself up to a governance based overview.”

Lack of processes

The result? Most companies don’t have processes or policies that manage social media output–and the ensuing risk that comes with a company-branded Tweet or a false rumour on a blog–in place he says. Although organizations are rushing to create continuous, fresh content on their various social media outlets,”what are the odds that they’re also taking the time to create the policies and procedures that will help them react to potential loss?” Shields says. “They aren’t doing that.”

Some don’t think they need them, because they aren’t a big company, or a media conglomerate with huge reach, but those outside media are probably more at risk, says Matthew Davies, senior underwriting officer and Canadian manager, professional and  media liability at Chubb Insurance Company of Canada

A newspaper or broadcaster is usually more aware of the risks that come with publication, he points out. “A retail clothing store may not be as savvy,” he says. “The exposure is going to be greater for those organizations that [aren’t continually] conscious of what they’re going to publish.”

How can brokers bring social media risk into the conversation? Shields recommends that brokers put clients through a loss review before any products are discussed. That will reveal what social media they’re using, how they’re using it, and what they’ve done to monitor it.

“The good part is, if you’ve done all that and you still want to move forward, the insurance should be cheaper because you’ve done a lot to mitigate your own risks,” he says.

Organizations should also have very detailed policies on how they use the tools, stresses Davies. Social media use should be part of the human resources handbook, and companies should carefully consider what their expectations are for the information that winds up online. he says.

“There should be some controls in place as to who can post, prescreening and making sure legal has had a chance to look at it,” he says. Some organizations, like a sports team, might have a Facebook page, but if each member has their own page, “who’s actually making the comment?” he points out. “Do they have the right understanding of what it is they’re doing?”


But brokers need their own education, says Shields, who points out that lengthy policies, and a lack of standard wording makes cyber-risk or media-risk coverage pertaining to soclal media challenging for brokers.

“Unlike general liability, there is no standardization in the market place at all,” he says. Another problem: uptake for it is low, he says. “Until it’s widely purchased, you’ve got to find the brokers who are dedicated to it.”

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