Enterprise risk management has become a key issue for corporate boards, with both liability and business exposure for unprepared boards. There's a very valuable case study from the Stanford Rock Center for Corporate Governance that explores this issue in more detail:
On March 5, biotechnology company Chimerix refused to provide a potentially life-saving drug to 7-year old Josh Hardy who was battling cancer. The drug had not yet received FDA approval, and the company had discontinued its "compassionate use" program to dedicate resources to Phase 3 testing of the drug.
Five days later, following a massive social media onslaught that captured national attention, the company relented.
In this Closer Look, we dissect the powerful force of social media and examine its potential impact on corporate reputation. We ask:
1. Why aren’t more companies prepared to deal with the reputational risks that emerge through online channels?
2. How should information gathered from social media outlets be used to supplement a comprehensive risk management program?
3. Are stories such as this one a board-level issue? If so, at what point do they become one?
4. If Chimerix were your company, what would you do differently?
Larcker, David F. and Larcker, Sarah M. and Tayan, Brian, Josh Hardy and the #SaveJosh Army: How Corporate Risk Escalates and Accelerates Through Social Media (April 14, 2014). Available at SSRN: http://ssrn.com/abstract=2424451