Social Media Comes with Risk and Opportunities - The IIA Releases First-of-their-kind Publications on Auditing Social Media

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LinkedIn, Facebook, Twitter, YouTube – all recognizable names and all part of social media. Many organizations have dismissed it as a fad. However this fast-growing form of communication is here to stay, and it’s critical that organizations understand the inherent risks and benefits, as well as evaluate how well the organization is managing them. The focus of a new book, social media risk is somewhat uncharted territory for internal auditors and was a highly anticipated session topic at The Institute of Internal Auditors’ (IIA’s) General Audit Management (GAM) Conference held this week in Las Vegas.

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Social media is not a fad. Brands must realize that they are no longer in control of the conversation. While this creates a great opportunity, there are real risks associated.

LinkedIn, Facebook, Twitter, YouTube – all recognizable names and all part of social media. Many organizations have dismissed it as a fad. However this fast-growing form of communication is here to stay, and it’s critical that organizations understand the inherent risks and benefits, as well as evaluate how well the organization is managing them. The focus of a new book, social media risk is somewhat uncharted territory for internal auditors and was a highly anticipated session topic at The Institute of Internal Auditors’ (IIA’s) General Audit Management (GAM) Conference held this week in Las Vegas.

“Social media is not a fad,” said GAM Conference speaker Peter Scott, APR, co-author of Auditing Social Media: A Governance and Risk Guide, newly published by The IIA Research Foundation (IIARF). “Brands must realize that they are no longer in control of the conversation. While this creates a great opportunity, there are real risks associated.”

Scott and co-author Mike Jacka, CIA, CPA, senior audit manager for Farmers Insurance and co-facilitator of the GAM Conference session, provided chief audit executives (CAEs) with a step-by-step guide to understanding:

·         The basics of social media.
·         Social media’s role in corporate strategy.
·         The development of social media policies.
·         Social media risks.
·         Social media governance.

The new IIARF book also provides a detailed social media audit program and five appendices.

“Companies that don’t understand the risks of social media are putting themselves at reputational and regulatory risk,” Scott said. “There are many hidden risks and implications for human resources, customer service, etc.”

Jacka continued, “Social media is often delegated to junior staff members in an organization because there is the perception they grasp its value. In actuality, while they may understand how to deploy the tactics, they lack business acumen and are not privy to the highest levels of knowledge or strategy in their organization necessary to center social media efforts around business objectives.”

Also considering the subject from CAEs’ perspectives, The IIA’s Audit Executive Center at The Institute of Internal Auditors (IIA) – a new service from The IIA that provides targeted thought-leadership, and resources to audit executives – has released a Knowledge Briefing, Social Media: Risks and Opportunities. The briefing details the results of an August 2010 survey conducted to understand the overall state of social networking in organizations represented by IIA members.

Key findings include: of the 60 percent of organizations that maintain an active social media presence, more than half have a formal (39 percent) or informal (23 percent) social media policy. However, 38 percent do not have a social media policy. Of those organizations with a social media policy, 71 percent do not conduct formal training or promote policy awareness.

“These statistics speak to basic corporate social media governance issues that organizations should address,” said IIA Vice President of North American Services Hal Garyn. “Chief audit executives should ensure there’s proper oversight and management of this highly visible communication channel that can significantly influence the organization’s reputation.”

Jacka and Scott, who also contributed to the Audit Executive Center Knowledge Briefing, provide nine risks in the briefing to which CAEs should pay attention:

1.     Lack of social media strategy
2.     Intellectual property issues
3.     Inappropriate disclosure of information
4.     Compliance with applicable laws
5.     Liability issues
6.     Human resources issues
7.     Lack of, or ineffective, key performance indicators
8.     Not having the right social media “evangelists”
9.     Not incorporating social media as part of the crisis communications plan

The nine-page report goes on to provide a list of questions CAEs should ask to facilitate social media strategic planning and an extensive list of resources.

“Social media isn’t going away,” Scott said. “It’s important for business to drive it in a risk mitigated way.”

To purchase Social Media: A Governance and Risk Guide, visit The IIA Bookstore at http://www.theiia.org/Bookstore. Social Media: Risks and Opportunities is available to members of The IIA’s Audit Executive Center. Visit http://www.theiia.org/CAE.

About The IIA and The IIA Research Foundation
Celebrating its 70th year, The IIA was founded in 1941.With 170,000 members in 165 countries, The Institute of Internal Auditors (IIA) is an international professional association with global headquarters in Altamonte Springs, Fla., USA. The IIA is the internal audit profession's global voice, recognized authority, acknowledged leader, chief advocate, and principal educator. The IIARF was founded in 1976 by The IIA. The IIARF expands knowledge and understanding of internal auditing by providing relevant research and educational products to advance the profession globally.

About The IIA’s Audit Executive Center
In varying membership packages, the Audit Executive Center brings together CAE-specific and targeted products, services, and thought leadership to empower audit executives to be more successful. The central feature of the Center is a web-based community that includes a Knowledge Center, Resource Library, peer-to-peer discussion forums, newsletters (including the CAE Bulletin), and events.

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Scott McCallum, APR
The Institute of Internal Auditors
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