The very real threat of fake news

At a recent press conference in the UK, Donald Trump shut down a reporter from the news network he loves to hate.

“CNN is fake news – I don’t take questions from CNN,” he said, before turning to a Fox News reporter to continue.

The US president certainly has a lot to answer for when it comes to the proliferation of the term ‘fake news’.

It was even awarded the Collins Dictionary Word of the Year for 2017, largely due to its usage rising by 365% since the presidential campaign in 2016.

Fake news – “false, often sensational, information disseminated under the guise of news reporting” – is nothing new, but today’s ‘alternative facts’ have rocked the very foundations of media outlets that once built their reputations on the accuracy of their stories.

Who is accountable?

So, is this issue largely confined to the world of politics, or should risk managers be doing more to help their business leaders navigate the fake news risk?

RIMS Australasia president and Lend Lease group head of risk and insurance Kevin Bates says ‘fake news’ had been identified on many risk registers long before Trump made it a buzzword.

“It is incredibly hard to manage and mitigate,” he says. “[However], regulation around content is what is being pushed to support managing this risk – Facebook being a notable call out.”

Indeed, there is a significant debate between authorities around the world and internet giants including Facebook and Google as to whether social networks should be held responsible for inappropriate content, including fake news. This comes off the back of Facebook estimations that as many as 126 million Americans were exposed to fake news created by Russia during and after the 2016 US presidential election.

Laying down the laws

Because of this potential influence on the democratic process, authorities around the world have begun to act.

In Germany, for example, a law against posting hate speech, child pornography, terror-related items and false information on social media now carries fines of up to €50 million. In Malaysia, propagating partially or totally false information can now lead to prison sentences of up to six years and fines of $130,000. In Brazil, 14 draft laws related to fake news are under examination.

Critics of increasing legislation, including Google, Twitter and Facebook, argue that existing laws are sufficient to deal with the issue and that new laws could curb free speech.

Regardless of legislation, laws do not stop crimes, so companies must take preventive measures to deal with the fake news risk.

A question of trust

Reputation Institute managing director Oliver Freedman says companies – big and small – must take the reputational risk of fake news seriously.

But how can corporates assess whether consumers know the difference between ‘real’ and ‘fake’ news?

“Consumers have established their own views on media sources. For example, we know Google is a trusted source for news whereas that is less true for Twitter, Instagram, LinkedIn and Facebook,” Freedman explains.

In practice, this means businesses should be less concerned if a ‘fake news’ story emerges on Fox News or Twitter, for example. But if the story transfers from less trusted sources to more trusted sources, a company needs to act immediately.

One of the most important levers that a company can use to put a swift end to fake news is its company leader or spokesperson.

“If leaders are trusted by the community then they can put an end to fake news – as the trust in them could mean that a denial from them ends the issue,” Freedman says. “However, if the leaders aren’t known or don’t have credibility then they most likely don’t have the ability to shut down the story.”

Just be prepared

This is why risk managers should partner closely with their public relations colleagues, says Allianz Global Corporate & Specialty CEO Willem Van Wyk.

“Risk managers should make sure that they have the right procedures in place with their PR teams so that they can act extremely quickly and keep any reputational issues to a minimum,” he says.

“Information flows so much faster today thanks to social media and because of that reputational risk is much larger.”

François de Hennin, independent risk advisor and consultant, and former global chief risk officer of GroupM, agrees that fake news must be pre-empted as much as possible.

“Whatever the situation, businesses should ensure first that they have appropriate online brand monitoring, particularly for B2C businesses,” he says.

“Secondly, [companies should have] social media tracking, beyond Facebook and Twitter – this is particularly important as search engines integrate more and more user-generated content, mainly on social networks – and community management in place.”

Finally, de Hennin says, companies must be able to identify opinion leaders and influencers and anticipate bad buzz. “In other words, firms must actively manage their online reputation, either in-house or through external specialists.”

All of this is important for risk managers today, because, like Trump, ‘fake news’ isn’t going anywhere anytime soon.