Reputations come with a health warning: they can go up and come down. Barely a year ago, sovereign wealth funds (SWFs) were viewed with suspicion in the US and Europe – raising national security concerns and encouraging protectionist legislation. In today’s volatile global capital markets, SWFs are still viewed with some caution but are acknowledged as making valuable contributions to Western economies.

This rise in reputation is fortuitous for SWF senior executives, but others are still engaged in daily battles to keep the scales from tipping the other way. For example, big-brand sponsors of the 2008 Olympic Games are finding themselves under an unwelcome spotlight, due to human rights concerns.

Organisations, corporations and governments can, however, identify and plan for such potential scenarios ahead of time. They can, and must, consider where the most vulnerable reputation points lie, and prepare response plans which will serve to minimise reputation risk at worst, and at best, turn challenges into opportunities.

Consider an organisation’s failure to deliver a major project. By acknowledging the reputation drivers in advance, the impact that this – or indeed any scenario – will have on the organisation’s reputation can be assessed. The fiasco at London Heathrow’s ‘flagship’ Terminal 5 is a stark reminder of how failure to deliver can undermine reputations from Day One.

“It takes many good deeds to build a good reputation, and only one bad one to lose it” - Benjamin Franklin Faced with a potentially damaging scenario, there are practical steps that organisations can take ahead of time. Advanced planning enables organisations to assess whether or not they have adequate controls in place and the assurance of safeguards. Preparing effective responses ensures that what is said and what is done actually match, and ultimately mitigate, potential fallout. This removes uncertainty and builds confidence among stakeholders.

A key question: Is senior management – up to CEO level – fully briefed and accepting responsibility for ensuring positive outcomes? An organisation’s inability to protect its’ reputation has real and dire consequences and is ignored at peril.

Responsible management plans for possible reputation-denting events such as partnership breakdowns, fiduciary slip-ups and regulatory non-compliance. The consequences of failing to do so range from resignations, shaken investor confidence and loss of licence to operate. Instead, armed with professional insight, an organisation can gauge the probability of any number of possible scenarios and then prepare for such eventualities by building a ‘goodwill bank’ of reputation equity.

Organisations with solid reputations are better able to deliver growth and profitability, outperform competitors and embrace new markets around the world.

Sound reputation management means sustainable business.

Selina Haylock is a Director at ReputationInc Dubai, specialising in scenario planning and risk management. For further information, please contact shaylock@reputation-inc.com