Knowledge Risks Of Social Media In The Financial Industry

The financial sector is characterized as knowledge intensive with knowledge as the key source of competitive advantage. The introduction of social media within the organizational environment has raised the number of knowledge risks that can lead to knowledge leakage and thus to a loss of competitive edge. The authors investigated knowledge risks arising from the use of social media within the financial sector. They interviewed twelve employees from ten different European financial institutions to identify strategies how financial institutions currently deal with knowledge risks. The authors identified three major knowledge risks induced by social media and it appears that financial institutions are skeptical towards social media adoption. However, competition forces financial institutions to adopt social media and to change their attitude. As a consequence, financial institutions need to find different strategies for the management of knowledge risks. The authors identified such strategies and they show which strategies link to the major knowledge risks.