The coronavirus has reshaped risk management practices in the Middle East and the global (re)insurance industry. Mr Simon Spurr of International General Insurance (IGI) looks back at how the company dealt with the pandemic as it evolved across its global offices, and talks about the path forward in a world of uncertainty and evolving risk.
The Middle East is no stranger to coronavirus outbreaks – most notably, the Middle East Respiratory Syndrome (MERS), which was first reported in Saudi Arabia in 2012.
However, one only has to look back to the HIV and AIDS outbreaks in the 1980s and then further back to the Spanish Flu in the early 20th century to see how a pandemic can reach such a global scale and unleash such a devastating toll on society like what we are seeing today from COVID-19.
The impact of the pandemic, and the evolving governmental and societal responses to it, present unique challenges to our sector and will undoubtedly shape how we think about risk going forward.
However, it also provides the opportunity to celebrate our successes: the role we have played in protecting people; how our industry has maintained continuity of the services it provides; and the role we will play in supporting society as we shape what is being labelled the new normal.
As risk managers, we are no strangers to balancing and prioritising risk, but the sheer speed and magnitude of the evolving pandemic has tested every ounce of our resilience and ingenuity.
As an industry, we have weathered the storm well. Our balance sheets have been impacted (some more than others), our ways of life and operations have been turned on their heads, and we face the future with uncertainty – both individually and corporately.
Some nine months into this crisis, however, we must also look to the future. What role should we play going forward? What opportunities does this once-in-a-lifetime crisis present? What skills do we need both individually and corporately to thrive?
January 2020 – ‘React’
COVID-19 hit the headlines in January when it was apparent that the outbreak was not an isolated epidemic, although it is fair to say that nobody at the time could have predicted its sheer scale.
As both the threat and the understanding of international governments developed through February, IGI – like its peers – took decisive actions to protect its people and the continuity of its business.
Our initial response was simple: introduce a range of physical measures within our offices and then, when we no longer felt comfortable asking staff to come to the office, send them to the safety of their homes. Such was our concern for our people that our global workforce was fully remote before any government imposition of controls.
We all had well-rehearsed business continuity plans – admittedly perhaps not designed for a 100% shut-down across our global offices – but the basics were all in place and tested.
Our investments in cloud-based technology, electronic trading and collaborative working tools allowed us to transition at speed and at scale to fully remote working.
With a few IT and business process tweaks to manage the new or enhanced risks of remote working, we were there. We were safe. Everything worked. The IT infrastructure was standing up as planned.
Our service levels had not missed a beat. The business was coming in. In fact, we were winning new business due to the dislocations. Claims were being paid swiftly. Our KPIs flashed green. Our people thanked us for prioritising their welfare.
But there was still much work to be done.
2020 April to now – ‘Sustain’
Whilst the initial phase may have been stressful, in hindsight, it was the easy bit.
Protecting the physical well-being of our people was intuitively simple. Instigating a business continuity plan in response to an immediate external threat was difficult to argue with and was playbook risk management.
As days turned into weeks, and weeks into months, it became clear that this was not a ‘blip’. The coronavirus was not going away. Markets crashed, commentators warned of a deep recession, and governments took precautions to try to prevent the hospitals from overflowing. The sheer scale of the pandemic began to become clear.
What had been ‘virtual meetings’ were now ‘meetings’. The initial novelty of working at home, juggling childcare with work, and trying to set up suitable ‘home office’ set-ups began to wane.
We moved to planning our ‘return to office’, and whilst in most locations we were successful in reaching a sustained safe level of occupancy allowing most staff to have regular time in the office, in the UK what had earlier looked like a September return began to fade, and at the time of writing, feels more like Spring 2021.
As we consulted with our people and witnessed their changing behaviours and moods in our daily interactions, it became clear that our practical steps to protect their physical well-being were only the start.
The very people who had stepped up and protected our business through this early period, the people who had allowed our business to invade their private homes, the people who were giving up what would have been commuting time to work through loyalty to our company, were suffering.
Gradually, the much celebrated ‘Business Continuity Planning’ and ‘Health & Safety’ toolkit of the traditional risk manager felt woefully inadequate to deal with a crisis of this magnitude and duration.
We have had to learn new, more nuanced, ways of looking at and dealing with risks relating to our people. IGI’s risk management team partnered with our colleagues in HR – with each side bringing their perspective.
We are involved in difficult conversations around protecting and maintaining the mental well-being of employees, how to ensure fairness when at some stage we do return to office, and how to maintain engagement and motivation.
We are broadening as individuals. Now we need to look forward.
2021 – ‘Thrive’
At some stage the collective efforts of our scientists will prevail. We will as a society get the coronavirus under control. Whilst we may never eradicate the COVID-19 virus completely, society will get to the point where we can move forward.
So how do we as risk managers take what we have learnt and play our part? What lessons can we take from this?
Traditional business continuity planning needs to mature more towards operational resilience. How do we align our people, processes and systems to operate effectively in times of disruption and crisis?
There are some new questions to consider in our risk management objectives. Do we truly appreciate the importance of the people in our business? As an industry, we focus on business continuity but as risk professionals, do we adequately consider the importance of people continuity planning?
It is important to consider and learn from the wins gained through this experience. The forced shutdown of operations made significant shifts to online processes non-negotiable – for example, changes in the London market that have been gathering pace for years around electronic trading becoming the default overnight.
The next step is to find ways to sustain this momentum in order to secure this opportunity and further increase efficiency and reduce the costs that have for so long been the bane of the subscription market.
Meanwhile, the global risk management community will be looking at how we use the experiences of the market dislocations and disruptions to better understand and communicate risk. It begs the important question of whether we should continue to consider a pandemic as a 1/200 event.
The global insurance industry has faced one of the most challenging periods in decades and has pushed the risk management industry into unchartered territory. The challenge for risk officers is to pursue actions that add value for both their companies and the market as a whole – not just for the here and now, but also for the long term.
As the world resets, risks will likely manifest across the whole organisation, throughout operations, compliance, financial, human capital and underwriting departments. How the industry repositions itself after such a monumental event will go down in the history books. M
Mr Simon Spurr is chief risk officer at IGI.