As horrible as the coronavirus pandemic has been, it has led to greater societal understanding of systemic risks, and that’s a good thing, a Lloyd’s of London executive asserted recently.
“The COVID-19 pandemic has [forced] the rest of society to understand systemic risk in a different light,” said Rebekah Clement, head of Communications & Engagement for Lloyd’s, during her keynote talk on global risk at the Global Insurance Symposium in Des Moines on June 29. “Now that we have all experienced a pandemic, I think we are much more open minded about systemic threats, and we are much more open about exploring the implications of these risks.”
Clement, speaking to the audience remotely during the conference, said that multiple levels of society have had an eye-opening experience with the pandemic and the systemic needs it highlighted.
“Governments, investors, central bankers and all manner of other stakeholders now see the threat of systemic risks more tangibly, and seem more ready to prepare and act accordingly,” Clement said. That’s good because even bigger risks are on the horizon and must command our attention.”
Some Lessons Learned
Clement said society has learned from COVID-19 the importance of customer experience and how it can be effectively supported digitally. This is particularly true in the insurance space.
“We learned the importance of how we can continually think of how to best support them, [with] an increased demand for simpler products and better clarity of coverage, following disputes over business interruption,” Clement said.
Additionally, Clement said, the idea of strengthening our preparedness for future systemic risks is much better understood and “has never been as important.”
“Systemic risks are the most difficult to quantify, understand and protect against, so this is the time to think of how to alleviate systemic risks placed on us,” Clement said, adding that Lloyd’s is pushing hard for society to have these conversations.
“Lloyd’s works across silos and engages with political leaders to shape policy and share thinking across markets,” she said.
As well, the power of digital has never been more apparent, particularly for insurers, Clement said.
“The pandemic has demonstrated the power of digital, and reshaped how customers operate and companies respond to” the technology, Clement said. “We must operate a fully digital marketplace.”
Lloyd’s she noted, has developed a virtual underwriting room as a step toward that future.
Future Systemic Risks
Beyond the COVID-19 pandemic, Clement pointed out that future pandemics could be worse and must be a “a regular aspect of risk management in every country around the world.”
At the same time, there are many other systemic risks to be aware about, Clement noted, including geopolitical instability involving population and border disputes, the rise of China as a superpower, India’s emergence, and Russia’s persistence as “a potent and disruptive force.”
Not to be forgotten, Clement said, climate change remains “the biggest systemic risk of all.”
Despite those pandemic risks to come, Clement said that the coronavirus pandemic has shown us what we’re capable of.
“We have the talent, knowledge and ability to mitigate these risks,” Clement said. “The [coronavirus] pandemic is beyond the scale of what has come, but it has also shown what is possible, making preparation for other systemic risks relevant.”