The IMF’s recent report is a wake-up call: “I have seen very few businesses meaningfully address the physical risks that they face over the long term.” – David Kneale, Head of UK equities at Mirabaud Asset Management.
In chess, the saying “see the whole board” refers to understanding how all the pieces interact with each other and keeping track of all the tactical options – both offense and defense – available. Tunnel vision will very easily result in a quick loss or the missing of a swift victory.
In a survey of 1,000+ professionals, over 20% of respondents said they still do not have a pandemic continuity plan in place, while more than 60% have not added analytical tools for assessing their business operations. With the threat of a second, larger wave on the horizon, this lack of planning increases the potential losses of major risk events in the coming months.
The Covid-19 pandemic and subsequent global lockdown have dramatically impacted businesses throughout the world. Whether enormous disruptions in supply chains or company-wide work from home policies, businesses have had to completely change how they operate. As major restrictions begin to lift, it may lead business leaders to mistakenly believe we are returning to “business as usual” and apply the same risk management practices that they have relied on in the past to prepare and respond to climate risk threats.
A global pandemic and the resulting economic damage had been forecasted over a decade before 2020, but companies ignored the warnings. Much in the same way, climate risk will lead to large scale economic downturn unless companies prepare their businesses to respond proactively.
The COVID-19 pandemic has pushed business leaders to rethink and reshape risk management for their organizations, from client relationships to updating their technology and claims process. As businesses begin to reopen, it is critical for businesses to continue developing their risk strategies and preparing for low-frequency/high-intensity events.
The end or easing of coronavirus lockdown measures does not mean companies should expect operations to return to normal. Companies must take this time to prepare for possible future flare-ups, as governments are likely to react more swiftly and decisively than before, and business leaders should analyze their continuity plans to proactively respond.
Researchers predict 18 to 22 named tropical storms will form in the Atlantic this year, with 3 to 5 expected to become major hurricanes. This continues the past years’ trends, but recent update indicates larger activity than expected earlier this year.
As businesses struggle with new operational hurdles, insurers have a unique opportunity to develop and reinforce strong, lasting relationships with policyholders. Proactive support, leveraged with advanced analytics, is a key difference maker and will lay the groundwork for long-term growth.
The extreme toll of COVID-19, coupled with what will likely be a long tail in both geography and time, means that the the novel coronavirus will dramatically change how insurance companies price and model similar risk into the future.