Fear and uncertainty have arrived in the UK, with the first cases of the coronavirus being diagnosed and the government’s announcement that the disease is “a serious and imminent threat to public health”. To date, there are eight cases in this country, which has led to the government being granted additional powers for the setup of checks at airports alongside the opening of quarantine hospitals.
The situation in China remains extremely worrying with over 1000 deaths and well over 40,000 infected. With an incubation period of 14 days, the numbers are expected to continue rising. Coronavirus began in the city of Wuhan, which has been subject to government lockdown – some 11 million people have had their movements curtailed.
Pandemics have their place on the risk radar and risk managers can draw experience from events such as the Severe Acute Respiratory Syndrome (SARS) outbreak which occurred in 2002-3 and killed a known 774 people, and infected 8,098. However, the impact of the coronavirus on the global economy is expected to be much bigger, according to data analysis from, Bloomberg. While it is too early for figures, it's worth keeping in mind the cost of SARS which was estimated to have wiped $40 billion off the global economy at the time. Given that China is the largest manufacturing economy and exporter of goods, the ramifications of this virus could be enormous.
Now is the time for risk managers to ensure they are as informed as possible and have a key advisory role within their organisations. Coronavirus is not only an alarming illness, it could also bring a business to its knees and as such, must be high on the board’s agenda.
The Institute of Risk Management (IRM) has published advice on managing coronavirus risks from one of its senior members, who works for a charitable health foundation. The guidance could help those who are starting out in their work in this area and provides some of the key considerations:
- Be aware of overseas travel to China and other higher risk countries in the Far East – should this be postponed?
- Staff already abroad may face travel restrictions and quarantine – how can these disruptions be managed?
- Is the business expecting visitors from overseas and does this include China – what action needs to be taken?
- Are staff being kept in the loop about coronavirus risks and is this being done in a way that is detailed but not alarmist?
- Is good hygiene being promoted?
- Should more staff be working from home and is the IT department geared up to assist if necessary?
- What is the impact on the company’s supply chain and is business continuity planning adequate?
It is also recommended that larger firms set up an incident monitoring team and that there are local plans made where necessary, based on each department’s needs. HR should also keep an eye on sickness levels and work with managers to see how a firm could cope with a reduced workforce if necessary. Even if an employee remains well, there is also the risk that their working hours could be affected if schools are closed, for example, or a family member becomes ill.
Risk managers need to be mindful both of the need to ‘do the right thing’ in terms of ensuring employees’ wellbeing, but also of financial implications. Even if sending employees abroad may be viewed as important, it may be far better to postpone business trips, both to protect that staff member, and to avoid any potential problems that could result should there be difficulty in repatriating them or any accusations of negligence.
This is also the time to ensure that business travel insurance is adequate. It has been reported that some policies are excluding pandemic risks, whereas others are providing cover, even if insurers may say that airlines should meet the costs of cancelled flights.
In terms of wider insurance implications, alarm bells from ratings agencies are not currently ringing, although they have said they expect there to be a limited impact on insurers, particularly those in life and health. The coming weeks will see if the containment measures implemented in the UK are effective, as well as to see if the number of victims, particularly in China start to decrease. Certainly, many people here will still see the impact as low, with risk managers likely not seeking to raise anxiety levels for businesses. But a pandemic emergency remains a possibility, albeit a distinct one and so a proactive approach is undoubtedly the best way forward.
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