You don't need to be BP, Toyota, News Corp or even Tiger Woods to know how quickly 'brand equity' can be destroyed by screw-ups, cover-ups and indiscretions. In the face of such PR fiascos, the accepted repair strategy has been to come clean as quickly and as contritely as possible. But in an era when corporate skeletons are subject to constant social media scrutiny, your business can suffer just as easily by being too transparent. Ask Bank of America.

Faced with new US regulations that limited the fees that banks can levy merchants every time a consumer makes a debit card purchase, the nation's second-largest bank could have done what so many corporations have done in the past and made up the loss in hidden charges. Instead, it announced in October that it was going to charge customers a $5 fee for using their swipecards - prompting a huge customer outcry. When rival banks backed away from extorting similar surcharges, Bank of America suddenly caved in and dropped the controversial fee. Any revenue the bank was hoping to raise by the hike was simply not worth the damage to its reputation.

But it's not just company integrity that is on the line. With Twitter, Yelp and Facebook fast becoming the printing presses of our age, people's individual brands are being subjected to the same harsh spotlight usually directed at celebrities. There are no safe havens anymore, not even in the workplace, where we have historically hidden behind our professional masks.

Paradoxically, this exposure also opens the door to new business opportunities since there are fortunes to be won and lost on measuring - and safeguarding - one's standing. Particularly when more and more of our interactions take place online between total strangers.

"I believe reputation capital will become a cornerstone of the 21st-century economy, more powerful than our credit histories," says Sydney-based author and collaboration consultant Rachel Botsman.

Her book What's Mine Is Yours: The Rise of Collaborative Consumption provided a vivid demonstration of why trust is vital in a world where social lending, crowd financing, car-sharing and couch-surfing are fast becoming accepted norms. Every day billions of dollars ride on the decisions we make about firms and people, whether it is job recruitment, marketing campaigns, flat-renting, swap exchanges and so on. In making those judgement calls, we place great faith in our own intuitions and those of our immediate social circles. We rely, in other words, on a random accumulation of localised knowledge about people, their backgrounds and various behavioural signals. What if we could pool all those circles of wisdom together and extract a common currency for evaluating everyone's levels of expertise, social resonance and, above all, such critical attributes as trustworthiness? Well, that race is now on.

"A huge amount of value is created - or lost - by the ability to judge a person's character and capabilities. Historically most of that data has been siloed in our heads but now a number of tech start-ups are working to bring a 'reputation graph' to life that is a partial record of what you know about the people around you and their professional qualities," says Jon Bischke, co-founder of one of those start-ups, RG Labs. Currently in stealth mode, Bischke's aim is to build products that change how people hire, form teams and start companies. His firm joins a growing list of start-ups that are using computers to synthesise the trust mechanics that are so second nature to humans in our real-world interactions with one another.

Many see measurement of reputation - trust quotients, if you like - as the next big frontier on the web. Just as Google unleashed the search potential of the internet with its PageRank analysis that assigned a numerical weighting to every nugget of information, so a new breed of reputation brokers is starting to define web 3.0 with the equivalent of 'PeopleRank' scores. You might think of these as Yelp ratings for people, creating a hierarchy of individuals and companies based on reputation scores.

Botsman is the first to admit that far more research is needed to ensure that recommendation engines can keep motivating good behaviours while at the same time quickly weed out the bad. There is always the danger, as we have seen with search engine optimisation, that any ranking tool can be gamed or bought. "I do believe the way we form trust face to face can be mimicked online but it's far more complex then a star, badge or points system. The way trust is measured is too often binary: it's good or it's bad. But the fact is, trustworthiness is much messier than that. It will take time, though. And I am not talking about your Twitter ranking - it's much, much bigger than that."

Scientifically speaking, however, 'Twitter rankings' is pretty much where we are right now. New companies with names such as Klout, Kred, PeerIndex, Identified, PROskore and Twitalyzer, have all developed ways for measuring our social and professional creditworthiness based on the data trails we leave behind us online. They look at our tweets, blogs, web mentions, network reach, online impressions and other social indicators and come up with a rating. These are generally expressed as single scores that fall somewhere between one and 100. Recognising that trust has to be measured across all its different dimensions - and in ways that cannot be easily gamed or bought - such scores are increasingly broken down further to reflect different spheres of influence or expertise.

Exactly which data feeds are harvested - and which computational recipes are used to blend them together - is a hot-button issue right now. As with all gamechangers during their formative years, social metrics have already incited a media and blogging backlash. Scores have instantly been dismissed as vanity metrics that simply play to our egos and competitive instincts; but at worst, they are seen as blunt instruments that can cost people future jobs or else cause irreparable damage to one's name and communal standing (see Identity Crisis, below). In both cases, the overriding concern has been about lack of transparency when it comes to scoring.

"It is so important not to black box this," says Damian Kimmelman, a New Yorker who interned on Wall Street as a risk-assessment analyst before moving to London and starting Duedil. His free service offers inside information on every company in the UK and Ireland, and their directors, based on a combination of public records and 900 news websites. Ten billion pieces of information on everything from litigations to financial results and credit checks are indexed and presented in an easily digestible format that comes complete with 'red flags' - the first step on the long road towards a reputation system for businesses. "I think I have a contrarian view on all this: no one metric is useful. Any single score, in and of itself, can be very deceiving. Just with statistics, you need to take scores in context. Information can always be misinterpreted. Any reputation system needs to be a two-way street - there has to be an element of trust. But trust itself is often misunderstood. You can have trust between two paedophiles or between two Mafiosi. People often confuse trust and trustworthiness."