In line with the BSP’s thrust to foster a balanced and coherent approach to innovation, the Monetary Board (MB) recently approved the issuance of pioneering guidelines on social media risk management that advocate responsible use of social media by BSP Supervised Financial Institutions (BSFIs). BSP recognizes that social media presents vast potential benefits and opportunities for greater economic advancement and financial inclusion. The guidelines ensure that the necessary safeguards, governance structure and standards are in place to effectively manage the associated risks.
The issuance is timely and suitable considering that the Philippines, with over 48 million active social media accounts (or 47% of the entire population), is currently one of the world’s fastest growing nations in terms of social media usage and level of engagement across various social media platforms. Likewise, BSFIs have been aggressively leveraging on social media platforms for marketing, offering of innovative financial products and services and engaging their customers and stakeholders.
At the back of this evolving and increasingly dynamic operating environment, the new regulation underscores the importance of having a well-defined social media risk management strategy aligned with BSFIs’ strategic business goals/plans. Depending on the extent and degree of social media usage, the BSP Circular requires BSFIs to adopt commensurate risk management mechanisms and governance structure to effectively identify, measure, manage and monitor risks arising from social media platforms. Aside from ensuring that the pertinent legal, reputational, strategic, operational, and compliance risks are addressed, the new guidelines highlight added dimensions to these traditional risks which BSFIs need to consider in designing their social media risk management program. These include the growing threats on information security and fraud such as account take over, malware attacks, and phishing and spoofing schemes, among others.
A BSFI’s social media risk management program should, at a minimum, be able to address potential reputational risks as well as provide guidance on acceptable use of social media by employees, whether for official or personal purposes. BSFIs, in formulating and implementing their social media policies, should see to it that existing rules and regulations on financial consumer protection, cyber-security, outsourcing and anti-money laundering, among others, are complied with.
View Circular 949