The frequency and impact of companies encountering negative social media is on the rise according to a research survey, which found companies that aren't prepared for an online backlash suffer the most.

Recently released research from Altimeter defined a crisis as a negative issue that originates in social media and results in a change in business practice or process, or causes financial loss through boycott or a drop in share price.

James Griffin, a partner from SR7 Social Media Intelligence, said that of the Altimeter research on 50 social media crises, the results found almost half could have been avoided if the company in question had a tried and tested social media crisis plan or had done prior research.

Griffin said that a solid social media strategy will go a long way to mitigating potential risks with employees, managers and boards all uncertain of where the limit is when it comes to discussing a company online. He recommended firms research and understand how they can positively engage in social media or at least prepare a social media crisis plan.

SR7 previously reported strong interest from financial firm boards wanting to explore social media, but they remain overly cautious of the online world.

 "The notion that social media should be solely used for marketing is wrong, indeed, social media is increasingly becoming a vital element in managing a brand, investor relations activities and corporate relations in time of a crisis," said Griffin.