Next stage of pandemic remains fraught with uncertainty, warns Zurich’s CRO

European companies need to remain extremely flexible during the next stage of the pandemic as the outlook remains uncertain, Zurich Insurance’s CRO Eugenie Molyneux told Commercial Risk Europe. Risk managers need to factor in likely further business disruption and the impact of Covid-19 infections on their workforce as economic activity returns following vaccination programmes across Europe, she added. Successful Covid-19 vaccination campaigns in Europe and the US have seen society and economies reopen. As the pandemic enters this new phase, companies will return to working onsite but will need to remain adaptable, Ms Molyneux said. “A potential rise in infections can still disrupt supply chains through workforce illness or isolation requirements. All the while, the health and wellbeing of workers should be a key consideration for employers,” she said. Supply chains have already been disrupted by Covid-19 infections in Asia, which have closed factories and ports during the past year. In Europe, businesses have also struggled with labour shortages as large numbers of employees were forced to self-isolate as infection rates rose, and as demand for goods and services surged following lockdowns. Despite vaccinations, infection rates could rise as more employees return to work during the winter. This stage of the pandemic is fraught with uncertainty for businesses, explained Ms Molyneux. The threat of new variants, uncertainties around future infection rates and the severity of those infections, mean companies will need to plan for multiple scenarios and be flexible and adaptable going forward, she said. “Companies will need to manage some disruption to cope with the current state, but also plan for the future state being different to that of today. The past is not a good guide to what will come next. In the first stages of the pandemic there was a high degree of government intervention, but now we are in a different situation with vaccinated populations and increased economic activity,” said Ms Molyneux. “We don’t know if this current state will persist and continue to improve as global vaccination rates increase, or whether there will be a new variant of Covid-19. Organisations need to be ready and have a plan for different eventualities, including a potential return to working from home, as well as the possibility of increased onsite activity,” she added. Many countries in Europe are removing Covid-19 measures and restrictions as the vaccination rate exceeds 70%. But with measures like mask wearing and social distancing no longer legally required in some countries, infection rates are predicted to rise during the winter. As restrictions ease, workplace transmission of Covid-19 is more likely, said Ms Molyneux. “Employers need to create a strong health-and-safety environment. It will also be necessary to monitor adherence to the policies they put in place and take action when employees are not in compliance. It may not be possible to 100% prevent transmission, but the risk can be reduced,” she said. Staff shortages for some sectors where transmission risk is higher are likely to be a feature of the pandemic during the winter and may require companies to take on additional staff, explained Ms Molyneux. High infection rates could result in above-normal rates of staff absenteeism, as well as employees suffering the long-term physical and mental health effects of the virus. Absenteeism could also be impacted by other diseases and conditions, as healthcare capacity comes under pressure from Covid-19 and potentially seasonal flu, or as workers succumb to conditions that were untreated during the pandemic. “There will be an element of disruption as Covid-19 infections take people out of the workforce, which will require companies to be adaptable. Employers will need to support those workers with Covid-19 and at the same time may need additional employees to help back-fill,” said Ms Molyneux. Employers will also need to consider the effects of ‘long Covid’ and mental health on their employees. The symptoms and duration of long Covid are not yet well understood but companies will need to support employees that suffer the long-term effect, such as with flexible working and counselling services, Ms Molyneux said. Companies must balance their duty of care to employees with operational requirements, she added. Covid-19 infections and vaccination requirements in the workplace could bring a heightened risk of employment disputes, litigation and reputational damage, she said.

Next stage of pandemic remains fraught with uncertainty, warns Zurich’s CRO

Workplace and supply chain risks must be watched

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