Changing Risk Profile
Immediate and long-term implications as businesses adapt to the interruption and changes triggered by COVID-19 can result in increased or new liabilities and risks. Given an organisation’s risk profile may look very different pre-pandemic versus post-pandemic, business management need to take steps to ensure the organisation’s risk profile continues to be up-to-date and well understood by decision makers and key stakeholders.
Business interruption scenario workshops
Through a pandemic scenario workshop (and in-depth interviews), our Risk Consulting team can help identify how a business is exposed to future pandemics. This workshop will simulate a real scenario and go through all key functions of the business and the business continuity plan (if available) to identify risk exposures and profile their severity. From this, our Forensic Accounting team can conduct a Contingent Anticipated Business Interruption Loss analysis to quantify the forecasted financial impact to the business. With this information, companies are in a better position to refine their business continuity plans, crisis management plans, supply chains and identify appropriate risk transfer options.
Pandemic risk vulnerability assessment
Businesses have multiple exposures to pandemics, which can significantly affect their operations, employee wellbeing, supply chains, revenue and future viability. A Pandemic Risk Vulnerability Assessment will identify the various ways the business is exposed to pandemics (outside of business interruption) and will profile the severity of these risks. With this information, risk control and mitigation measures can be put into place and inform both business continuity and crisis management plans, as well as ensure the business can more effectively respond to a pandemic.
Pandemic forecast models
At the beginning of a pandemic, it can be very difficult for organisations to understand and quantify how their business might be affected as the pandemic progresses. Pandemic forecast models can be used to predict the near-term trajectory of the pandemic. This predictive modelling framework consists of a stochastic metapopulational compartment model coupled with human mobility networks to forecast how the pandemic will spread. With this information, businesses can forecast how the pandemic will develop and affect their operations and make plans to improve business continuity, employee safety and financial viability.
Marsh and our pandemic research partner, Metabiota, can offer expert support to organisations seeking to understand and quantify infectious disease risk, consider the impacts of ongoing or potential future epidemic outbreaks, and address potential business and operational impacts. Consulting engagements are tailored to specific client needs, and are led by a team of experienced epidemiologists and risk analysts.
Forecasting the COVID-19 outbreak
Marsh utilises Metabiota’s epidemic surveillance system and global infectious disease simulation engines to project the course of an epidemic as it unfolds. This allows policymakers, public health professionals and organisations to plan response efforts and allocate resources effectively.
These abilities include case projections and geographic spread and have been used to inform organisational responses to the 2018 Ebola virus disease outbreak in Equateur, Democratic Republic of Congo (DRC) and again in 2019 to respond to the Ebola virus disease outbreak in Kivu, DRC.
Metabiota develops a number of disease spread models to quantify the likelihood and severity of plausible outbreak events across the globe. The models are stochastic, event-based; metapopulational epidemiological compartment models and are based on the latest scientific research, incorporating pathogen characteristics, transportation networks, local medical resources, and pandemic preparedness. The simulations produced by the models use a probabilistic sample to generate simulated outbreak event catalogues, which estimate the probability of experiencing epidemics of different sizes and severities.
Marsh and Metabiota use these specific modelling modules to help businesses analyse financial disruptions and losses and to develop business continuity plans.
Liability risk identification
With the outbreak of a pandemic, companies potentially have new liability exposures that they may not have previously anticipated, as well as reduced liability risks due to decreasing revenues and operational changes. Through a Liability Risk Identification workshop and interviews, the changing liability risks can be identified and profiled. An Insurance Gap Analysis can also be done to identify gaps in coverage and potential premium savings.
Some of the increased liabilities that may arise due to a pandemic include:
- Employee and third party liability – Eg. Liability arising from individuals who are exposed to the virus at work, on your premises, or from coming into contact with your employees.
- Management liability – Eg. Liability arising from how senior management prepares for and responds to an outbreak.
- Directors’ and Officers’ Liability – Eg. During or following a pandemic, shareholders may file litigation alleging, among other things, a lack of preparedness for the potential effects on corporate operations and revenues.
In the current environment, organisations may also wish to conduct a COVID-19 Risk Assessment. For more information, or to arrange a conversation with our Marsh Risk Consulting team, please contact your broker.
Working from home cyber threat risk management
As companies seek to reduce pandemic exposures to employees and encourage them to work from home, they become more susceptible to cyber risks.
Some of these risks include:
- Insufficient IT infrastructure capacity and expertise;
- Immature or non-existent data governance;
- Inadequate security strategy, architecture and controls; and
- Ineffective enforcement of remote work policies.
These risks increase the vulnerability to social engineering and phishing scams, denial of service (DoS) attacks and ransomware attacks. Marsh Risk Consulting can conduct a Cyber Risk Focus workshop to identify these risks, profile their severity and work with your compliance and IT teams for effective risk management and mitigation treatments. Additionally, our Cyber Practice specialists can conduct a cyber coverage gap analysis on your existing insurance program and recommend relevant cyber insurance solutions, as well as help you understand COVID-19’s implications on existing cyber insurance.
Workers compensation risk profiling
The impact of COVID-19 on Australian businesses can be both positive or negative. Some businesses, such as supermarkets and certain manufacturers – whilst having to deal with unprecedented supply chain issues – will ultimately thrive. Whereas other businesses, such as restaurants or retailers, may be struggling to survive. Australian employers will be managing their way through a situation never before experienced, with employees that are uncertain around their future.
This change will also influence an employer’s workers compensation risk profile regardless of whether your business is ramping up dramatically (more claims) or slowing down (no longer suitable duties opportunities). As your risk profile changes, the workers compensation risks will be different, but still present.
Some of the key workers’ compensation risks that employers should be considering include:
- Increased workers’ compensation cost due to inability to provide suitable duties for employees with incapacity
- Increased workers’ compensation claims due to employment uncertainty
- Significant increase in working from home arrangements
The Mercer Marsh Benefits (MMB) team of specialist workers’ compensation consultants and allied health professionals can support your business to mitigate workers’ compensation risk.
MMB is a collaboration between Marsh and Mercer Consulting. Together, we represent one of the largest employee benefit consultancy and brokerage businesses in Australia, with a combined experience of more than 50 years in employee benefits brokerage, consulting, and HR outsourcing businesses.
Expat support and advice
Expatriate Health Insurance is complex in a normal working environment, with the need to recognise and manage individual country compliance and medical systems.
COVID-19 has introduced a new level of complexity to Expat Health with multinational workforces, travel restrictions and closed borders the risks to expat workers during a pandemic is heightened.
The Mercer Marsh Benefits (MMB) team of expat health care specialists can provide advice to employers and their expats on the developing situation, including compliance considerations if you need to bring your expat workers back home.
Explore our Expat Medical Cover tool to help employees access the right information and take necessary action in relation to international health cover limitations and/or the impact of Medicare in Australia.
Insurable risk identification and gap analysis
Once recovery commences from the pandemic, companies will likely have changed their operating model, suppliers, workforce and future strategy. All of these changes have implications to a company’s risk and therefore their insurance program. Through an insurable risk identification exercise, these risks can be identified and then compared to the insurance program to identify any gaps, or duplications, in coverage. Following this, recommendations can be made on how the program, limits and wording can be restructured to cover the insurable risks in the most cost effective way.
Insurance policies provide a financial safety net for certain types of adverse events. An Insurable Risk Review validates coverage and identifies potential program enhancements, to help ensure policies actually anticipate the range and quantum of insurable risks reflected by an organisation’s exposures. Using a structured and disciplined methodology helps to close potential gaps, improve program efficiency and instil confidence that insurance policies will respond as expected.
Marsh’s Insurable Risk Review methods are applicable to any organisation, regardless of industry sector and complexity and is scalable to address all or specific lines of coverage.
For more information, or to arrange a conversation with our Marsh Risk Consulting team, please contact your broker.
We are here for you
As COVID-19 continues to affect how we all do business and interact with one another, we are committed to continue to deliver timely and relevant information to our clients and broader community. If you have any questions or would like to have a conversation about the impact coronavirus is having on your business, please reach out to your Marsh representative, or email us here.
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