Strengthening Trust and Reputation in a World Impacted by Social Media

Engaging social media goes far beyond simply sharing posts for others to see. It entails accepting an extensive set of terms and conditions—documents many skip reading. Yet, buried in the terms is a broad license that allows platforms to use, modify, and even sell users’ content.

Your Posts, Their Profit Party 

While users technically own their content, the real power rests with platforms such as Facebook, X (formerly Twitter), and Instagram. These are not just spaces for self-expression; they are advanced data gold mines. These platforms excel at monetizing user data. Every post, click, and interaction feeds targeted advertisements, analytics, and insights sold to third parties, including advertisers, data brokers, and, occasionally, government agencies.

The real treasure of social media is not witty posts or stunning selfies: it is the mountain of data users unknowingly give away. Artificial intelligence (AI) accelerates this by analyzing browsing habits, locations, and personal profiles to extract profit-driving insights.

Data brokers, operating in a similar way to commodities traders, buy and sell this information without consent for uses ranging from market research to political campaigns, leaving individuals with little control over their data. AI further clouds transparency, masking data origins and cementing social media platforms’ central role in the data economy. Social media companies are not passive intermediaries. They are architects of personal data commodification.

AI Wrote This—or Did It? 

Millions of users are flooding social media with AI-generated content, blurring the line between originality and derivative work. This shadowy territory exists because AI models often train on massive data sets, sometimes without proper licensing or user consent.

With intellectual property laws stuck in the pre-AI era, disputes over ownership loom large, threatening to destabilize platforms’ business models and erode user trust. To navigate this minefield, companies should act fast, establish clear guidelines, advocate for updated laws, and adopt safeguards to balance innovation with accountability.

When done right, AI could ignite a golden age of creativity. But without clarity over ownership, these technological marvels could become ticking legal time bombs.

Leaders Are Scrutinized Continuously 

In today’s hyper-connected world, the boundary between personal and professional lives has all but disappeared, leaving corporate leaders increasingly vulnerable. Social media, once celebrated for boosting visibility and increasing engagement, now magnifies risks as innocuous posts can spiral into security threats or crises.

The tragic assassination of UnitedHealthcare CEO Brian Thompson in December 2024 is a chilling reminder that public scrutiny and physical danger are no longer distant possibilities.

Reality demands a fundamental shift in how executives manage their roles and public presence. Leadership now requires not only strategic acumen but also a heightened awareness of risks tied to modern visibility.

During a CNBC Power Lunch interview following Thompson’s death, I emphasized how health-care companies’ attempts to remove information from their websites proved futile and highlights a critical lack of understanding among leaders about the depth and magnitude of the Internet.

Investor meetings, product presentations, and industry conferences should continue as they clarify innovation and foster stakeholder trust. However, these and other activities should be approached with recalibrated strategies, including enhanced security protocols and better crisis management.

Increased scrutiny of corporate practices, which has been under way for most of this century, was accelerated publicly in 2011 by the Occupy Wall Street movement and was amplified recently by the US Securities and Exchange Commission (SEC) and Federal Trade Commission. This mistrust is the cutting edge of concern, driven by years of convoluted policies, opaque products, and a lingering sense of consumer alienation.

Restoring trust requires a bold, multiphase strategy grounded in transparency, accountability, clear communication, and genuine fairness. Compounding these issues, social media has emerged as a double-edged sword. While it fosters engagement, it also leaves behind trails of exploitable information. With AI algorithms amplifying even minor missteps into full-blown crises, the stakes for building trust have never been higher. Unfortunately, many corporate cultures, business leaders, and their advisors are simply not prepared or trained to operate or respond at this speed.

The Risk of Oversharing on Social Media  

Last spring, I worked with a security firm on a case involving the CEO of a global corporation who faced online backlash and threats. Posts showcasing his new home, weekend beach house, and luxury cars, including his license plate details, spread online.

After reviewing these images, we traced the leaks not to journalists or hackers but to the CEO’s own family. His wife and daughters had naively fueled criticism and threats by sharing their lifestyle on social media platforms, particularly Facebook and TikTok.

This case exposes a blind spot many executives overlook: their families. While business leaders and employees are trained in digital discretion and protocols, their loved ones often remain unaware and exposed. To mitigate these risks, companies should expand privacy and security training to include executives’ families, ensuring that everyone understands the dangers of oversharing online.

Who’s Watching Your Data? 

The AI-driven data economy is transforming business operations and amplifying social media’s reach, requiring boards to help management navigate the tension between digital engagement and privacy as regulators intensify scrutiny of data and cybersecurity practices.

Over the last two years, the SEC fined financial firms $1.5 billion for failing to monitor private messaging, social media, and unauthorized devices, targeting Barclays Capital, Goldman Sachs & Co., and Morgan Stanley & Co. in 2022, as well as BNP Paribas and Wells Fargo & Co. in 2023.

Furthermore, the European Commission imposed heavy fines for data breaches against Google, Microsoft Corp., and Meta Platforms.

Domestically, Congress is advancing consumer privacy legislation, including the American Privacy Rights Act, which seeks to establish comprehensive federal standards to protect consumer data. These moves echo the European Union ’s General Data Protection Regulation, the California Consumer Privacy Act, and the Texas Data Privacy and Security Act, which went into effect in July 2024.

The Cost of Data Illiteracy  

As technology accelerates at a ludicrous velocity, boards face mounting pressure to navigate the complexities of AI and data governance. Data have become the lifeblood of equity, reputation, and sales, while increasingly complex and geographically diverse regulatory and disclosure requirements add significant pressure to board responsibilities.

Boards require practical and focused strategies to effectively oversee operational and reputational risks. Key priorities include the following:

Regulatory challenges. As scrutiny around AI and data sharing grow, management should regularly assess risks through independent reviews. Engaging independent auditors, legal experts, and communications professionals can help identify areas for improvement, ensure compliance, and build trust with stakeholders.

Data privacy and security. Data privacy and security policies should be updated and reviewed every six months. These plans should include tools to detect breaches swiftly, respond effectively, and recover efficiently. A strong system protects sensitive information and minimizes reputational and financial risks.

Ethical data practices. Ethical management of data is fundamental to maintaining public trust. Management should create clear policies regarding data ownership, user consent, and third-party access. Close monitoring of data access and secure disposal practices can prevent misuse. Additionally, an “AI code of conduct,” focused on fairness, bias reduction, and ethical evaluations, can be publicly posted and shared to strengthen stakeholder confidence.

Warren Buffett highlighted the critical importance of being prepared and taking swift, decisive action when he said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” While organizations cannot control every aspect of the vast digital landscape, boards can lead by fostering a culture of proactive risk management. By equipping management with cutting-edge tools and encouraging up-to-date training and clear protocols, boards can empower teams to navigate these complexities with confidence and competence.

[AUTHOR BIO] Richard Torrenzano is chief executive of The Torrenzano Group. For nearly a decade, he was a member of the New York Stock Exchange management (policy) and executive (operations) committees. He is the author of the new book, Command the Conversation: Next Level Communications Techniques, and coauthor of the bestselling book, Digital Assassination. He is a sought-after expert and leading commentator on artificial intelligence, cyberattacks and digital attacks, financial markets, brands, crisis, media, and reputation.

This article first appeared in NACD’s Directorship® magazine. Further reproduction or dissemination of this document without permission from NACD is prohibited.