Profits today, penalties tomorrow: The real cost of distrust
Roy Morgan CEO Michele Levine here responds to Mark Ritson’s recent Mumbrella opinion piece, in which he referenced Roy Morgan and said “brand trust needs to be taken with a massive dose of salt”.
Levine refutes the idea that if a company is making money, reputation can wait. On the contrary, she says, Australia’s last few years show the opposite: distrust is not a vibe problem; it is a balance‑sheet, boardroom and licence‑to‑operate problem that can make seemingly healthy brands fragile.
Michele Levine, Roy Morgan's CEO, has responded to Mark Ritson's jab at brand trust
Financial markets price distrust in real time
When distrust erupts, markets react first. Recent Australian and global examples show the materiality is immediate and large:
- Medibank shed about $1.6 billion in market value in the days after its data breach, as investors priced cyber risk, remediation costs and class‑action exposure.
- AMP lost around 80% of its market capitalisation following the Banking Royal Commission, reflecting structural repair costs and a multi‑year trust deficit.
- Facebook saw ~$120 billion erased from its market value in the wake of the Cambridge Analytica scandal, a lesson in how a trust shock can reshape cash‑flow expectations overnight.
- Rio Tinto lost around $4 billion in the weeks following the Juukan Gorge cave destruction, highlighting the capital‑market penalty for governance failure.
- Qantas dropped roughly 30% at its 2023 nadir amid illegal staff‑sacking findings and ‘ghost flight’ allegations, demonstrating that even profitable incumbents are not immune to trust risk.
These are not PR abstractions. They are repricings of risk, future cash flows and cost of capital. Profit can coexist with distrust for a time, but the market imposes a trust tax—via higher discount rates, volatility, and the diversion of cash to remediation rather than growth.
From reputation to existential risk
The most damaging form of distrust is not a bad headline; it is the erosion of social licence—and, in extreme cases, threats to the legal licence itself.
- Telecommunications: Following high‑profile failures, public dissatisfaction quickly morphed into calls for stronger penalties, licence scrutiny and tighter service‑assurance obligations. When governments and regulators are pressed to consider cancellation or suspension of operating rights, the debate has moved well beyond marketing.
- Supermarkets: The national conversation on market power has normalised talk of divestiture powers and even the breakup of major grocers. Whether or not a formal breakup occurs, the signal to boards is clear: distrust can invite structural remedies that permanently change the profit pool.
- Casinos and resources: Australia now has precedents for licences being suspended, reconditioned or placed under special management. These are case studies in how distrust migrates from consumer sentiment to hard law and operational curtailment.
Once social licence is punctured, political actors, unions and civil society coordinate pressure. Boards lose strategic degrees of freedom, and the cost of delay compounds.
