VIEW: On the importance of trust in business

“Restoring trust is the greatest moral challenge of our time.” These are the words of Richard Edelman, CEO of the eponymous global communications firm, which this month released its annual Trust Barometer survey. It showed that trust has changed profoundly in the past year, with “my employer” emerging as the most trusted institution globally; whilst trust in peer-to-peer platforms such as social media has declined significantly. But perhaps one of the most important findings was on the importance of trust itself, its significance to business and how it can be quantified.

The research showed that not only is trust a powerful asset for organisations but that it is closely connected to risk. Indeed, trust is a strong predictor of opportunity and resilience and therefore converts into tangible competitive advantage.

This matters for risk professionals. Trust is intimately related to reputation. An organisation’s reputation is backward-looking and a product of our rational analysis of how something or someone has performed in the past. Trust, by comparison, is forward-looking. It is not rational but an emotional response based on past behaviour. For example, we choose an airline with a reputation for good safety and customer service in the past, because we trust this will continue in the future. Trust is the desired outcome of reputation.

So just as reputation is viewed as a vital asset that must be protected and managed, so must trust. The two are inseparable and have a cause and effect relationship. Over the last decade, Edelman’s report has charted a gradual loss of faith in traditional institutions and sources of authority. At the same time, the importance of reputation and trust has grown dramatically. These concepts have always mattered, but today business models are built around the power of the brand. If trust in the brand collapses, so does the business model.

Understanding and managing the levels of trust in our own organisations – from the perspective of all stakeholders – has therefore never been more important. Trust may be an emotional concept, but it has rational business drivers.

    Share Story:

Recent Stories