COVID-19: The global risk response - IRM

IRM has drawn on its global network of regional/sector groups to ask them for their views on the ground on how the pandemic is affecting their sector/countries. Among other things, its sector analysis reveals that:

• Cyber risk a key heightened risk during the pandemic. Many companies are in the process of assessing their cyber risk profiles in the full work from home operating environment which seemed to have happened overnight. Activities including trading, customer service, recruiting and financial statement preparations are all being done from home. Although working from home wasn’t entirely foreign, it was never so widespread and in many cases was not considered (or tested) in business continuity plans.
• The energy industry has been heavily affected by Covid–19 over the last few months. With many organisations having supply chains which rely heavily on countries which have been significantly impacted by Covid-19, as well as relying on people working remotely and on shifts (including fly-in / fly-out), it has become increasingly difficult to meet the challenges of progressing projects and maintaining operations at optimum levels. The lockdowns globally have also seen a major decline in demand for oil and gas which has resulted in an unexpected demand shock, placing downward pressure on prices. According to a recent survey conducted by the IRM Energy SIG, when asked which events energy companies have been most impacted by over the years, Covid-19 and the current oil price slump came out on top. 
• As with most other industries, Covid-19 has taken no prisoners in financial services. The impacts are broad and varied. Financial and crypto markets in free fall, potential widespread credit defaults, insurers potentially forking out for business interruption or just general resilience issues especially where there are dependencies on third parties both local and foreign.
• The major impact of Covid–19 on the health sector has been the requirement to prepare at great pace and with urgency for a huge and uncertain increase in the number of patients suffering from the virus, to ensure that they receive the treatment and care required, with reduced numbers of available staff, who have also been directly impacted by the virus.

”Some less risk mature organisations will be in unchartered territory which will sadly, inevitably, lead to some businesses folding as has been widely reported,” said Iain Wright, CFIRM, IRM chair. “Many companies do not survive a moderate/severe global risk event like the Covid-19 virus.”

“We are now deep in a phase of response and recovery. As risk professionals we are skilled at framing and understanding these difficult policy choices. One of the challenges for risk managers will be to ensure there is a balanced, proportionate and commonsense approach.”

“A core principle of risk management is to learn from experience and improve; there will be lessons from the experiences of dealing with the challenges of Covid-19 which will result in improved resilience and better risk management in the future. Professional risk management will deliver the resilience that organisations will need to emerge and recover from the pandemic crisis, the role of the risk manager has never been more important.”

Michael Bartlett, co-Chair Covid-19, added: ”As a classic crisis management scenario, we have seen the phases of ignorance, disbelief, individual panic alongside organisational inertia, then over-reaction until a new (albeit forced) equilibrium is attained. The next few months remain uncertain: will the current state hold steady and evolve as assumed or are more seismic shifts to come?”

”What is fascinating to see in the current state is that there are many opportunities to re-evaluate what is important and to benefit from shifting priorities… At a macro-level, the risk management community has the potential to provide intelligent advice on the real risks of future paradigm-changing events whether Covid-2x, other low probability events or, probably more pertinent, the effects of climate change which is the longer-term catastrophe for all our societal norms.”