Reputation should be a leading risk indicator

Unfortunately, when it comes to risk management, reputation is sidelined.  

It may be listed as a consequence, but rarely is reputation actively measured, monitored and reported on like other leading indicators.  

That gap means many organisations are missing an opportunity to catch issues before they become problems that cost time and money. 

Erosion of trust happens over time, and the early indications can easily be seen through data that exists in most organisations (more on this later). 

Weak trust doesn’t stay contained – it spreads; people feel cautious, so they start to apply more scrutiny. Consequently, they identify other areas where they are less satisfied than before.  

Erosion of trust can have devastating consequences for organisations; difficulty retaining and recruiting staff, project delays and increased costs, to name a few. 

Qantas’ rocky few years post COVID-19 provides a textbook example of the pain endured when trust is lost. So much so that the organisation, under the leadership of Vanessa Hudson, has been open about embarking on a reputation reset strategy.  

In many instances, this could be prevented if organisations keep a watchful eye on reputation, just like they do health and safety and financial performance. 

When reputation is a leading indicator in a risk management framework, it is regularly monitored, and performance is reported to decision-makers.  

Trust becomes a core focus of risk-based discussion around the leadership table, and the subtle clues are interrogated. It may be a trend in social media comments, or the words people choose to express feedback. There are many small hints that trust is wobbling, and a strong understanding of behavioural science helps predict what will come next.  

When the conversation around trust is happening at this level, at the time before it becomes a problem, those charged with protecting reputation have a reasonable opportunity to safeguard it.  

The organisations that treat reputation as a leading indicator won’t just protect trust — they’ll prevent the cost of losing it.