Coronavirus: Companies need to activate business continuity plans sooner rather than later, says Parima

The Pan-Asia Risk & Insurance Management Association (Parima) has created a webpage for its members to keep them abreast of the latest developments with the novel coronavirus and provide support and advice at this difficult time for all companies in the region.

Parima chairman Franck Baron is also Singapore-based group deputy director, risk management and insurance at International SOS, the world’s largest medical and travel security services firm. He is therefore heavily and directly involved in the corporate response effort to the virus.

He told Commercial Risk Asia that the decision by many leading countries to block all visitors from mainland China and the cessation of flights to China and wider measures across the region are having a big immediate impact on business.

Supply chains are already being stretched – especially for medical supplies and equipment – and could prove to be significant over time. Those companies reliant upon supply of goods from China in particular need to consider activating their business continuity plans sooner rather than later, suggested Mr Baron, speaking in his capacity as Parima chairman.

Mr Baron pointed out that Singapore, the US, South Korea, Australia and Indonesia have all blocked entry for all mainland China passport holders, while Vietnam and Indonesia have stopped all flights to mainland China. “Fifty other countries have various restrictions on travellers from mainland China. For most companies, travel to mainland China is not recommended at this point, and travel around the region is undertaken on an as-needed basis,” he explained.

Singapore, where Mr Baron is based, has been hit hard following the recent announcement of DORSCON Orange status (up from yellow) by the Ministry of Health in Singapore.

The ministry advised all businesses to enhance their business continuity capabilities in the workplace. “All workplaces should step up their business continuity plans and prepare for widespread community transmission. The business continuity plans can include allowing employees to telecommute or dividing the workforce into segregated teams,” it stated on 6 February.

Mr Baron added: “Most conferences and public events have been cancelled/postponed. Schools have cancelled all external activities, assemblies and sporting events. Some companies have asked employees to start working from home and only visit the office for essential meetings, and temperature screenings are being done twice a day.”

And the Parima chairman does expect “significant” supply chain disruption. “Eventually we expect there to be significant supply chain disruption, particularly given the dependency on China regionally and globally. Already, medical necessities for managing the situation such as face masks are in shortage worldwide, and production cannot keep up with the demand. And other related medical personal protective equipment is experiencing a similar shortfall,” he said.

“Companies whose supply chains involve China will likely start to experience a similar disruption given the travel restrictions mentioned earlier, and might need to activate their business continuity plans sooner rather than later,” added Mr Baron.

In related news, leading independent economic research company Capital Economics estimates that economic disruption caused by the coronavirus will cost the world economy more than $280bn in the first quarter of this year and means global GDP will not grow on a quarter-by-quarter basis for the first time since 2009.