The results of one of the polls at our recent roundtable for Chief Risk Officers really stood out. Every single CRO said that their firm had coped better than expected with the Covid-19 lockdown.
Whilst you could argue that the natural pessimism in risk professionals might mean things usually turn out better than expected, the poll result still surprised me.
We also discussed the various impacts on firms, as well as how Covid‑19 has impacted the risk landscape.
Our staff have put in extra effort…
72% of CROs flagged “looking after staff” as one of the most important strategic priorities. A number of CROs noted that staff have put in an exceptional effort over the last few weeks. Their concern was now around staff wellbeing, noting particular pressures for those who were managing childcare and other demands at home, and for those where work was their primary social contact and who may be feeling isolated.
Coverage issues
50% of CROs ranked “unanticipated coverage” in their top 3 risks arising from Covid-19.
Two-thirds identified “analysing existing losses” and “understanding the impact on future exposure” as being key priorities over the coming weeks.
With investment volatility also being identified as a current key risk, the combination of reserve and asset strain may result in many firms reporting significantly reduced capital coverage ratios over the coming months.
What if something happens to the IT?
42% of CROs flagged “IT access and working from home” as a key operational risk, given the critical dependency that firms now have on technology enabling home working. Some existing IT systems require on-site maintenance which may be particularly difficult during lockdown.
The world isn’t the same anymore…
There is significant uncertainty around what the post Covid world looks like, but some things are becoming clear:
- demand for office space may fall given the success of working from home
- firms may look to digitise the last remaining “analog” functions such as post and issuing cheques
- the task of exiting lockdown will be more complex than entering it.
Permanent changes in customer behaviour are expected, including transport and shopping habits. Those who react quickest have the opportunity to reap the greatest benefits, but could also make the biggest mistakes.
Stay safe…
CROs identified the following areas of focus over the short term:
- making sure that appropriate control procedures are in place and are working effectively, even in the current rather different environment.
- understanding the new risks arising from a very different business environment, with potentially new business opportunities, and changing demands from customers
- looking harder at emerging risks and the firm’s ability to withstand these.
I would be interested in hearing your stories of what’s working well and what issues are proving to be the greatest challenge.
In the meantime - stay safe.