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.
Exponential Pandemic growth and business interruption
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:
- Liability for employees and third parties who are exposed to the virus at work, on your premises, or from coming into contact with your employees.
- Management liability – Eg. In how the 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.
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
ACC risk profiling
The impact of COVID-19 on New Zealand 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. New Zealand 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 ACC risk profile with businesses ramping up dramatically (more claims) or businesses ramping down (no longer suitable duties opportunities). The ACC risks are different, but still present.
Some of the key ACC risks that employers should be considering include:
- Increased costs due to inability to provide suitable duties for employees with incapacity
- Increased ACC claims due to employment uncertainty
- Significant increase in working from home arrangements
- Exposure to ACC penalties of up to 75% of an employers standard levy
The Wellnz team of ACC and health management specialists can support your business to mitigate your risk. Wellnz has more than 20 years’ experience in supporting employers with their ACC and Health Management solutions.
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. Our team is here to support you and your employees during this time of uncertainty.
MMB is a collaboration between Marsh and Mercer Consulting, which between them have more than 50 years’ experience in the employee benefits brokerage, consulting, and HR outsourcing businesses. Together we represent one of the largest employee benefit consultancy and brokerage businesses in New Zealand.
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.
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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The information contained in this page provides only a general overview of subjects covered, is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Insureds should consult their insurance and legal advisors regarding specific coverage issues. All insurance coverage is subject to the terms, conditions, and exclusions of the applicable individual policies. Marsh cannot provide any assurance that insurance can be obtained for any particular client or for any particular risk. Statements concerning tax, accounting, and legal matters should be understood to be general observations based solely on our experience as insurance brokers and risk consultants and should not be relied upon as tax, accounting, or legal advice, which we are not authorized to provide. All such matters should be reviewed with your own qualified tax, accounting, and legal advisors.