With today’s technology, a lender’s reputation can be destroyed at the snap of a finger ― or the stroke of a few keys.
Social media risk ― the threat that employees, customers, or vendors can undermine a company’s brand and public image ― should be a top concern for lenders, said Jim Satterfield, president and chief executive of crisis management firm Firestorm, at the NAF Association’s Nonprime Auto Financing Conference held here in late May.
“It’s the largest going risk that you face in your business today,” Satterfield said. “Because someone else is determining who you are and what your company is and what it does ― and how it does it.”
The threat stems from the high volume of customer interaction conducted online these days. “Everybody in your company is now a reporter,” he said, adding that customers are “reporters,” too. “Tweets are going out, postings are going on YouTube and Facebook ― information is flowing out your door.”
The growing social media risk has prompted stiffer regulations for some industries. Satterfield noted that the Financial Industry Regulatory Authority has developed guidelines for what stock brokers and broker dealers can say or do via social media, and the National Association of Insurance Commissioners has done the same for insurers and brokers.
It’s only a matter of time before social media regulations are drafted for auto finance, too. “Look for a regulator soon to come near you and say they now regulate that portion of your business,” he said.
PREPPING FOR TROUBLE
Whatever the disaster, lenders must devise a plan to avoid consequences like layoffs, revenue loss, or lawsuit. Satterfield offered lenders a three-pronged strategy for preparing for a social media crisis ― or any other disaster:
• Predict. Understand the threats that could negatively affect your business, like an earthquake that destroys a servicing center or a dissatisfied customer whose complaint goes viral.
• Plan. Develop policies, processes, and procedures. Part of a company’s plan should include monitoring social media to ensure that employees are conducting themselves appropriately. Take action when they are not.
• Perform. Implement a viable solution, then train and test. “If you don’t do that in advance, you are not going to be successful in a disaster or a crisis,” he said.
―Christina HaberstrohLike This Post