15 Lug Risk Management after COVID-19
As member of a leading panel of Risk Management experts within the global networks Brokerslink, we have been interviewed by the magazine “THE FULLCOVER” to share a very in-depth and inspiring analysis about the often-underrated value Risk Management Practice – and how it has dramatically sky-rocketed now. Here you read selected highlights.
Expected or unexpected, a crisis never seen before
The coronavirus outbreak is affecting hundreds of thousands of people and having a growing, damaging impact on global economy.
Not just “an unexpected event” – so far, the first score of the 21st century has had three regional epidemics such as SARS (2003), Swine Flu (2009), and MERS (2012). Nonetheless over time it has fallen in the probability scale. Perception was not adequate whereas the focus shifted towards new risks, such as cyber risks. However, the existence and significance of this potential risk, known for years, was put to the major test of the pandemic: were the Business Continuity Plans able to protect their companies?
The question should be different: the Coronavirus epidemic is challenging the way many organizations respond to risk. In this case, their physical assets (factories and systems) are available for use, but the employees, suppliers and customers are likely affected and not available. There is also the added pressure to the bottom line as traditional insurance coverages do not respond to business interruption in the case of a pandemic. So, were business continuity plans in place really effective in protecting the human assets and not just the physical assets?
Best practices to COVID-19 Risk Management
Test the impact of the COVID-19 risk on your organization. Have you tested the effectiveness of your company Business Continuity Plan on a pandemic scenario? Often plans address the most obvious physical threats but do not consider the intangibles such as the reliance on key workers and access to operating systems that might not be available, or without customer demand.
Keep talking. Management of information flow is a key challenge. Staff and customers are seeking information and reassurance at a time when messages transmitted by the media may be piecemeal, skewed in nature and potentially melodramatic. Management must play a key part of managing the workforce’s anxieties and concerns by maintaining an effective organizational response and communication workflow.
Plan for resumption and resiliency now. Even if it may sound odd, organizations need to develop a response and recovery plan before it is too late. Business resumption plans must be robust and tested if they are to have the desired results following the COVID-19 event.
How will technology change the risk profile of organizations?
We are witnessing the migration of workers towards technological platforms. Two examples of this acceleration can be seen in both the collaborative technological tools with full capabilities that support telework and distance education, and robotic process automation (RPA) solutions supporting business and operational processes.
How will this technological boost impact the organizations? It depends on different elements:
- the way how this risk will be managed in an integrated environment made up of both digital and physical operations.
- the integration of the different risk transference products (insurance policies, etc.) in a single solution that includes all type of technology risks like cyber, property, liabilities, etc.
- the characteristic of the risk professionals managing this type of risk, who will have to have both strong technological skill and competencies as well as a corporate holistic approach of the business models.
What we have learned and what you can learn from now on
The first, and one of the most important, steps in the risk management process, is risk identification. We at Augustas have identified these risks in benchmarking studies. What we have demonstrated absolutely true, even before the pandemic, is that all risks that have been identified, must be managed, in order to select the best risk management techniques for mitigation, including transference to the insurance / reinsurance market.
Risk managers and risk management consultants, like us and the Brokerslink network, are ready and willing to work together with brokers, insurers and reinsurers to design better solutions to manage the pandemic risk. If risk management recommendations are taken into more serious consideration, negative unexpected consequences from identified risks like COVID-19 could potentially be reduced or even avoided altogether.
Risk Management is the new gold
Once considered a last resort or a complex tool to fix catastrophic scenarios, today Risk Management has quickly become a priceless asset, almost for everyday corporate life. This pandemic shows how longer and longer it can hit us. Future has become hard to forecast and even harder to govern, as a dense convergence of medical, economical, social and political factors are entwining in so different and unpredictable ways. That’s why Risk Management is the “new gold” for companies of all-sizes.
If you want to read the full edition of this post, please go here where you can also have the full edition of the magazine “The Full Cover”: https://www.mdsinsure.com/en/digital-fullcover/
Finally, browse our Corporate Presentation 2020 and find how we help companies world-wide to “embrace the good side of risk”, especially during this pandemic.