A new report by re/insurance broker Aon shows that 82% of global firms did not rank a pandemic or other major health crisis within their top 10 risks prior to the outbreak of COVID-19.
Additionally, less than 30% of EMEA respondents to a survey by Aon said they had a pandemic plan in place before COVID, while in North America that number was 31%, and 52% in APAC.
The broker says these findings show it is “imperative for businesses to reprioritise risk and to innovate and explore new risk management strategies” in the wake of the crisis.
At the time of Aon’s Global Risk Management Survey in 2019, pandemic risk was ranked 60 out of 69 identified risks.
Enterprise risk management strategies and management teams were therefore unable to rapidly respond to the threat of the pandemic and, when it hit, their risk infrastructure struggled to cope with the initial response.
And while businesses in different parts of the world now find themselves at varying stages of their response to COVID, more than half of global companies said they expect COVID-19 will continue to impact their business a year from now.
“There is no question that the COVID-19 pandemic will permanently change the way companies operate,” said Rory Moloney, Chief Executive Officer, Global Risk Consulting at Aon.
“There is a long way to go before we are in the ‘post-COVID era’, but as we move towards a recovery phase, companies must now ask what risk management and resilience should look like going forward,” he continued.
“Among the top priorities for companies seeking to reshape their business are the new and accelerated use of technology, redeploying resources, workforce planning and rethinking the future of work—this is only the beginning of a much more long-term evolution in risk management.”
Richard Waterer, Managing Director EMEA, Global Risk Consulting at Aon, also commented: “Government response has been a necessary stopgap for a global event of this size, but our survey reveals there is also a clear need for risk transfer solutions to support corporate mitigation efforts. Part of that journey will require companies to rethink access to capital alongside risk, in addition to ongoing collaboration between the public and private sector.”
“Equally important is that the insurance industry innovates in response to companies’ changing needs, increasing global volatility and emerging risks,” Waterer added. “Successful insurance solutions in the wake of the pandemic will be more agile, strategic, targeted and scalable.”
Aon’s report highlighted that a critical part of reacting and responding to crisis, and building a successful enterprise risk management strategy, will be in ensuring that the workforce is able to adapt, communicate and collaborate when a crisis strikes.
But the increased dependency that organisations have placed on digital platforms is making them potentially vulnerable to adverse cyber events, information loss and reputational impacts on a new scale, and will require a refresh of cyber and risk management strategy.
Moving forward, the broker therefore believes that risk and business leaders must broaden their perspective in evaluating major shocks, not just anticipated losses.
Navigating new forms of volatility, building a resilient workforce and rethinking access to capital will all play a role in a companies’ ability to navigate future events.
Equally, a more cohesive and integrated approach will be necessary to recover not only from the pandemic, but from future shocks.