Along with regulatory risks, the Federal Financial Institutions Examination Council (FFIEC) highlights several areas of reputational risk for financial institutions (FIs) using social media. According to the FFIEC, “a financial institution engaged in social media activities is expected to be sensitive to, and properly manage, the reputation risks that arise from those activities.“
In this part of our blog series, we’ll discuss the four main areas of reputational risk for FIs and ways to mitigate them.
FRAUD & BRAND IDENTITY
As social media is an ever-evolving and constantly changing channel, protecting your brand identity can be challenging. You may face risks through comments made by social media users, spoofs of brand accounts or users fraudulently posing as a company.
Fortunately, that’s why social media monitoring tools and techniques exist. Using a social media monitoring platform, such as PerformLine, will help monitor for brand mentions, identify heightened risk and give you the opportunity to respond appropriately.
By instituting proper policies to monitor and address brand identity, you will be able to catch fraudulent uses of your institution’s brand in a timely manner.
Financial Institutions working with third parties to provide social media services should be regularly monitoring the information being placed on their social media sites, as it poses a great reputation risk.
Your institution is liable for what third parties say on your behalf, and your financial institution will be the one to hear from regulators and consumers if something goes awry. Before facilitating a contractual agreement with a third party, a financial institution should weigh the pros and cons of using a third party to conduct their social media activities and be fully aware of what ability the institution has to control the content on a site owned or administered by such third parties.
FIs should ensure they are evaluating the third party vendor's reputation in the marketplace, paying attention to their policies, the process and frequency by which the third party’s policies may change and what, if any, control the institution has over the third party's actions. Simply put, it’s vital that you do your research before choosing a partner and that you keep up with monitoring the information they post on your institution’s social media sites.
Financial Institutions need to be cautious and monitor for the possibility of a consumer posting confidential or sensitive information on the institution’s social media pages or site. A customer unknowingly posting private information causes privacy headaches for FIs, even when they are complying with applicable privacy laws in their social media activities.
Monitoring for these instances and having a set procedure or plan in place to address them if, or when, they do occur, will ensure the institution is properly protecting themselves and their reputation.
While being able to take advantage of responding to consumer complaints and questions over social media is a positive thing, financial institutions could also run the risk damaging their reputation by not catching or responding to those complaints via social media.
Consumers have the ability to make critical or inaccurate statements, or to publicly expose specific issues about their account over social media–scenarios that financial institutions should be aware of and be ready to effectively evaluate the risks faced.
Institutions need to have processes in place to monitor for and respond to complaints and concerns, as well as question and complaint forums on social media sites to ensure that such inquiries, complaints, or comments are reviewed, and when appropriate, addressed in a timely manner.
If you’d like to learn more about how PerformLine can help your organization mitigate risk on social media, speak to one of our experts today.
Plus, check out the other parts of this social media compliance blog series, and subscribe for blogs, content offers, newsletters & more to be delivered straight to your inbox.