Coronavirus outbreak poses big challenges for Asia-Pacific risk managers as toll rises

Risk managers in the Asia-Pacific region and worldwide need to brace themselves for a difficult start to 2020 as the rapidly escalating coronavirus outbreak in China and now worldwide hits the Chinese economy, global trade and supply chains, and equity prices. This year was predicted by many risk and insurance managers to be a difficult one as political risk rapidly rises up the agenda along with cyber and the impact of climate change, and the insurance market becomes ever tougher. The coronavirus outbreak has added to the lengthening list of serious challenges that the c-suite will call upon risk managers to help with and find solutions. Late last night, news emerged that the death toll from the virus has now reached 106 and there has been an increase in infections of 60% in one day, to bring the number of people infected up to 4,517. The bulk of victims are in China but the news that Germany confirmed it now has five cases, along with the numbers reported in the US and other countries around the world continuing to rise strongly, suggests this is a problem that will only get worse. As of late last night, there were more than 70 confirmed cases in 17 places outside of China, including at least five in the US. China’s finance ministry and National Health Commission have extended CNY60.33bn ($8.74bn) to help contain the spreading virus, according to a statement on the ministry’s website, reported news agency Reuters. Global equity markets plummeted on Monday as the bad news from China continued to flow. US Dow Futures plummeted 477 points. Futures on the S&P 500 fell by 1.7% and the Nasdq fell 2.1% on Monday. Crude futures were trading 3.5% lower and gold, the usual destination for investment in a crisis, rose by 0.8%. China’s economy is being hammered. On the first day of the Lunar New Year, there was a 41.6% decline year on year in civil air travel, a 41.5% reduction in rail travel and a 25% drop in road transport. Shanghai Disneyland locked down and Starbucks said it would shut all its outlets in Hubei province. Marriott, Hilton Worldwide and Hyatt Hotels are reportedly waiving cancellation fees, according to online reporting service SeekingAlpha. Hong Kong, China’s international outlet to the world, is still reeling from a year of protests and civil unrest that has caused huge business interruption and economic losses. This latest crisis will create further big problems for an economy based on international trade and travel, and create further divisions between it and the central government. CNN reported last night that trade union the Hospital Authority Employees Alliance, which represents medical workers in Hong Kong, is demanding the government shut down its border with China indefinitely to prevent the spread of the virus. Under-pressure Hong Kong chief executive Carrie Lam had already said that Hong Kong would temporarily close some of its borders. As a further example of the growing desire of Hong Kong’s inhabitants to distance themselves from China, the union said this was not good enough and the territory needs to look to its own interests. The union reportedly said that, while it agrees with the measures announced by Ms Lam, it also demands a refusal of all entries to Hong Kong via China. The group allegedly also called for the government to publish numbers of passenger flows entering Hong Kong via China. Meanwhile, the director general of the World Health Organization (WHO), Dr Tedros Adhanom Ghebreyesus, met Chinese President Xi Jinping on Monday to share the latest information on the coronavirus outbreak and reiterated their commitment to bring it under control. The WHO said the National Health Commission presented China’s strong public health capacities and resources to respond and manage respiratory disease outbreaks. It said the discussions focused on continued collaboration on containment measures in Wuhan, public health measures in other cities and provinces, conducting further studies on the severity and transmissibility of the virus, continuing to share data, and for China to share biological material with WHO. The two sides agreed that the WHO will send international experts to visit China as soon as possible to work with Chinese counterparts on increasing understanding of the outbreak to guide global response efforts. “Stopping the spread of this virus both in China and globally is WHO’s highest priority,” said Dr Ghebreyesus. “We appreciate the seriousness with which China is taking this outbreak, especially the commitment from top leadership and the transparency they have demonstrated, including sharing data and the genetic sequence of the virus. WHO is working closely with the government on measures to understand the virus and limit transmission. WHO will keep working side by side with China and all other countries to protect health and keep people safe.” The WHO added: “Much remains to be understood about 2019-nCoV. The source of the outbreak and the extent to which it has spread in China are not yet known. While the current understanding of the disease remains limited, most cases reported to date have been milder, with about 20% of those infected experiencing severe illness. Both the WHO and China noted that the number of cases being reported, including those outside China, is deeply concerning. Better understanding of the transmissibility and severity of the virus is urgently required to guide other countries on appropriate response measures.”

Coronavirus outbreak poses big challenges for Asia-Pacific risk managers as toll rises

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