The World Economic Forum (WEF) has been sounding the alarm bells about pandemic risk since 2006. Every year, the WEF publishes a Global Risks Report in partnership with Zurich Insurance Group, Marsh McLennan and SK Group, which presents a crystal ball that aims to foretell the future of risk around the world. The work is important in helping insurers, brokers and risk professionals to understand the risks we’re facing today and those that will have major impacts in the next seven to 10 years.
Pandemic risk has featured in the Global Risks Report since 2006, and yet, how many people who read the report over the past 15-years actually envisioned that we would experience something like the COVID-19 crisis? That was a question posed by Colleen Zitt, chief risk officer at Zurich North America, when presenting the ‘Global Risks 2021: A Vision for the Future’ session at RIMS Live 2021.
Fellow speaker Jeff Bray, head of global risk management at Prologis, made a similar observation: “What’s really amazing is that [pandemic risk] was hitting the Global Risks Report in 2006, but did anyone feel like they came into the [COVID-19] pandemic completely prepared? Probably not. And I think it’s just a good reminder that we often underestimate what we think either has a low likelihood, or it just won’t happen to us.”
When the Global Risks Report first included pandemics and other health-related risks, it warned that a “lethal flu, its spread facilitated by global travel patterns and uncontained by insufficient warning mechanisms, would present an acute threat” that could have significant impacts like “severe impairment of travel, tourism and other service industries, as well as manufacturing and retail supply chains”. That all sounds rather too familiar today after the risk of a global pandemic became a reality in 2020.
In the 2021 Global Risks Report, infectious diseases were reported as the top global risk by impact and the fourth most significant risk by likelihood. According to the report, developments stemming from the pandemic – including the millions of lives it has claimed and the pressure it has put on long-standing health, economic, and digital disparities – could put more roadblocks in the way of the global cooperation that will be required to address other long-term challenges and high-ranking risks like climate change.
“When you think about the pandemic, and really what we’re going through right now, it could affect nearly every facet of the risk landscape for at least the next 10 years, if not more,” commented Zitt. “We know about the large number of deaths that have occurred to date, as well as lost jobs, and ultimately closed businesses - that will affect the landscape for years to come.”
Preparedness for pandemic risk, and ultimately the response to the COVID-19 pandemic, has varied around the world. Bray highlighted Asia as responding better to the crisis than the US and Europe, perhaps because they’ve had more recent events involving infectious diseases and so the pandemic was “more relevant,” and they perhaps had a better mindset.
“Something that really resonates with me is just the curveball that misinformation can sometimes provide,” he said. “If we think of other big risks in this report [climate change, cyber, etc.] the combination of maybe a lack of government coordination, maybe getting caught off guard on preparedness, and then misinformation all really complicates how risk managers should be thinking about how they might respond to risk going forward.”
With all events, whether small or systemic in nature, lessons can be learned and opportunities can be taken. Zitt noted: “When you think about it, COVID-19 also fueled some real opportunities, and many of us had to turn our businesses into an overnight connection point for our customers that could no longer be face-to-face. What’s really happened … is the fueling of technology and digital portals and connections that ultimately don’t require face-to-face, and that certainly has its benefits, but also some drawbacks.”
