employee using facebookSocial media has in many ways revolutionized the way we do business. Its use has permeated both personal and professional spheres, and that blurry line can often lead to risks for businesses. There are growing concerns from businesses about the ways in which their employees use social media, and what information is shared there.

In recent years, liabilities related to social media, including privacy, security, intellectual property and employment practices liability, have been increasing, and the industry is grappling with how best to manage these issues.

According to a McKinsey & Company survey, the top five risks that executives associate with social media usage are:

  1. Leakage of confidential information — 55%
  2. Inappropriate intellectual property distribution — 40%
  3. Employee distraction from core tasks — 40%
  4. Posted content reflecting negatively on company — 30%
  5. Inappropriate employee discussions — 19%

Some of these concerns are very real potential risks presented by inappropriate use of social media, including:

Reputation and brand

Social media offers many ways to share information about businesses, including reviews, customer service posts and more. Disgruntled employees can take to the web to defame your business and cause irreparable harm. In addition, your own employees may inadvertently draw legal action through commentary of an inflammatory or inaccurate nature about competitors.

Intellectual property

There are many instances where an employee shares information online about a company’s projects, plans, inventions or other intellectual property. This can compromise the business’ performance and give competitors the edge. In addition, a business may be liable if an employee inappropriately uses another organization’s intellectual property.

Cyber crime

Social media and its many portals offer a multitude of opportunities for hackers to gain access through mal- ware, viruses and more. It also can allow criminals’ ways to access personal or corporate information online. Which has lead to a rise in cyber liability insurance to protect against data security breaches.


Employees have the means to communicate with each other via social media and this can often be a positive. However, there are situations when inappropriate or harassing interactions occur via social media, creating human resources situations.

Policies and procedures

In order to most effectively mitigate your business’ risks in terms of social media, it is crucial to start with a written policy. The policy must clearly spell out your company’s rules regarding use of social media by employees, including clarification of personal versus work-related social media activity, what company information can be shared, can employees disclose their connection to the company, and more. Companies may even want to detail if and how employees are allowed to post company logos or locations, and a prohibition of making disparaging comments online about the company or other employees. Through offering  training sessions, informational handouts, webinars, or other tools to teach workers about how to best use social media and how to avoid potentially problematic situations.

Since this is such a new area of coverage, traditional insurance plans generally don’t cover these types of liability in relation to social media, although there are limited cases of such coverage being written in to larger policies.

In some cases, cyber liability insurance or employment practices liability insurance could theoretically cover some of the issues relating to social media usage, however, this will vary from case to case, so it is important to review your options with your insurance consultant. The appropriate use and integration of social media – both from a business perspective and from a coverage perspective – is a topic to watch closely in the coming years.