By Dr. Andrea Bonime-Blanc, CEO & Founder – GEC Risk Advisory and Vikram Sharma, President, Crisp
Corporate directors have been risk-challenged in the past year like never before. Besides the unrelenting cascade and convergence of serious events, triggered by the global pandemic, boards have had to deal with accelerated risks and expanded risk oversight.
They and management have had to broaden their stakeholder horizon beyond just worrying about shareholders to worrying about employees, communities and customers, let alone the deliberate actions of agenda-driven groups who exploit digital chatter to coordinate and execute new ways of undermining corporate reputation, operations or market value.
Add to this mix the ever-present, fast-changing and explosively-growing layers of digital and technological change that are intensifying the depth and expanding the breadth of the traditional pre-pandemic risk landscape.
One of the least understood and potentially most damaging types of risk that have emerged forcefully in recent times, especially this past year, are the ‘unknown unknowns’ lurking within digital chatter on open social media channels and the Deep Web (see Table 1 below).
We have entered a time of continuous risk and crisis management as companies must now tackle multiple crises happening simultaneously or contiguously at both management and board levels, as one of us argued in a blog piece recently. According to the World Economic Forum (WEF), many organisations’ approaches to risk mitigation look ‘increasingly outdated.’ A recent WEF report asserts that ‘in a world of accelerating challenges, static annual documents need to make room for continuous horizon-scanning for early indicators of change and associated timelines for action’.
Fortunately, many crises can be identified through advanced new risk intelligence solutions which identify potential risks long before they become public, providing an opportunity to mitigate or minimise the damage. The following sections examine the who, what and why of ‘digital chatter’ and a final section provides board members with a roadmap on ‘how’ to deal with this new and evolving risk landscape going forward.
What is digital chatter?
Digital chatter is the summation of conversations happening online that take place across the surface and buried in the Deep Web. It includes open or indexed and closed or dark social media channels as well as forums and messaging apps. And it is growing exponentially in volume, variety and velocity. “Eighty-five per cent of brands said that lost reputation could reduce sales and 77 per cent said that it could disrupt operations and hurt profit margins.”
“Eighty-five per cent of brands said that lost reputation could reduce sales and 77 per cent said that it could disrupt operations and hurt profit margins.”
In fact, as of October 2020, according to Statista, the number of people using social media is more than 4.14 billion, or more than half the world’s population. Every minute of every day, Facebook users share 150,000 messages and upload 147,000 photos, according to Domo’s 2020 Data Never Sleeps 8.0 report; WhatsApp users share 41,666,667 messages; Instagram users post 347,222 stories; Twitter gains 319 new users; YouTube users upload 500 hours of video; Reddit sees 479,452 people engage with content; and TikTok is installed by 2,704 new users. The options for sharing content online keep growing, with the global average at 8.8 social media accounts per person, according to a recent Reportal study.
With this kind of growth, it’s inevitable that a percentage of the users behind the collective creation of digital chatter have intent to harm brands, entire industries, or worse. With false and harmful content, deep image and video fakes, it’s easy to see how this amplification can go very wrong among bad actors looking not only to spread disinformation, but to outright discredit organisations, incite violence, or manipulate stock prices.
Who’s behind digital chatter?
As more of these platforms come online, so do new, unknown risks and opportunities for bad actor, activist, agenda-driven and interest groups to coordinate and exploit them. These groups move through transient digital platforms to get to their targets. Each one is dynamic, using digital chatter in different ways, and continuously evolving their tactics and tradecraft
Why digital chatter matters
Paying attention to digital chatter before it becomes a serious risk and crisis for a company, is another form of effective reputation risk management. The Reputation Risk Handbook, defines reputation risk as:
- ‘an amplifier risk that layers on or attaches to other risks – especially ESG risks – adding negative or positive implications to the materiality, duration or expansion of the other risks on the affected organisation, person, product or service’.
The implications for brand value are enormous and getting bigger. According to a Lloyds and KPMG 2020 study of corporate brand and reputation value, it accounted for 35.3 per cent of the market capitalisation or $16.77trillion of shareholder value in Q1 2019 of the world’s 15 leading equity market indices.
Moreover, Forrester, in a commissioned study on behalf of Crisp, in which it analysed 75 annual 10K reports filed with the US Securities and Exchange Commission, found the following:
”All 75 brands emphasised the importance of environmental, social and governance (ESG) priorities, 99 per cent discussed the importance of protecting reputation and 67 per cent recognised that threats to reputation can originate in and are both accelerated and worsened by social media.”
Awareness that a lost reputation can damage business results was also high. Eighty-five per cent of brands said that lost reputation could reduce sales and 77 per cent said that it could disrupt operations and hurt profit margins. According to the same Forrester study of 75 10K report, the impact of lost brand reputation could also lead to other negative outcomes as set forth in Figure 1 below:
The impact of lost brand reputation of 75 B2C brands that stated damages to brand reputation could lead to the following negative outcomes in Forrester’s recent annual 10-K report analysis.
How to deal with digital chatter matters
Companies need to invest so they can read the digital chatter tea leaves and proactively avert or mitigate the threats to their business. Indeed, a Crisp survey of 100 communications leaders, titled Risk Intelligence In A World Of Accelerating Change says that ‘social media/adverse commentary exceeds cybersecurity/cyber threats, environmental/extreme weather, and industrial resources/supply chain risks in terms of its likelihood to occur and the severity of its impact’. And chief communications officers are on the front lines of managing this risk and do have their finger on the pulse of what’s percolating.
The bottom line on this topic for boards is this: does management have the equipment that is needed – in terms of people, practices and resources – to tackle the acceleration of risk by digital chatter? If they do not, it is imperative that the board demands accountability from the CEO and management on what the company will do, immediately, to understand their brand and reputational exposure to the dark side of the digital world. This issue is not going away, indeed it will continue to explode exponentially to the detriment of those who are unprepared.
About the Authors:
Dr. Andrea Bonime-Blanc is founder and CEO of GEC Risk Advisory, a strategic governance, risk, ESG, ethics and cyber advisor to business, NGOs and government. A former senior executive at Bertelsmann, Verint and PSEG, she serves on several boards and advisory boards, is independent ethics advisor to the Financial Oversight and Management Board for Puerto Rico and life member of the Council on Foreign Relations. She is author of numerous books, most recently Gloom to Boom: How Leaders Transform Risk into Resilience and Value (Routledge 202) and The ESGT Megatrends Manual (Diplomatic Courier 2021). She tweets as @GlobalEthicist.
Vikram is President of Crisp, the leading provider of early-warning risk intelligence, where he brings extensive experience as a technology executive driving digital transformation and growth as an operator and in private equity. He also serves as a board member at portfolio companies and as a senior advisor to Baird Capital in making venture capital and private equity investments in strategically targeted sectors around the world. Vikram is a frequent speaker at industry events and has also been featured in CBS News, New York Times, USA Today, among others.