By Nicholas Ballasy

The Federal Financial Institutions Examination Council issued a supervisory guidance for financial institutions on Wednesday about risks involved with the use of social media.

The FFIEC develops procedures its member agencies follow for examinations of financial institutions, including the Office of the Comptroller of the Currency, the Fed, the FDIC, the NCUA and the CFPB.

“The use of social media to attract and interact with customers can impact a financial institution’s risk profile, including risk of harm to consumers, compliance and legal risks, operational risks and reputation risks. Increased risk can arise from poor due diligence, oversight, or control on the part of the financial institution,” the guidance said.

There are no new requirements imposed by the guidance for financial institutions. Instead, the agencies said the guidance was issued to help financial institutions understand the applicability of existing requirements and supervisory expectations related to social media use.

Among the recommendations from the agencies is the creation of a risk management program.

“A financial institution should have a risk management program that allows it to identify, measure, monitor, and control the risks related to social media. The size and complexity of the risk management program should be commensurate with the breadth of the financial institution’s involvement in this medium,” the guidance said.

“For instance, a financial institution that relies heavily on social media to attract and acquire new customers should have a more detailed program than one using social media only to a very limited extent.”

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