Risk managers face tough decisions as restarts loom

As governments look to ease coronavirus lockdown measures, some companies will have to reinvent themselves as risk managers find ways to restart operations in a world of social distancing and economic uncertainty.

As companies plan a return to work they will need to build in flexibility and consider the long term, according to Ellen Dunkin, RIMS vice-president and CRO and general counsel at Amalgamated Life Insurance Company. In the absence of vaccines or immunity, businesses will not be able to return to work as normal and will need to adopt new ways of working, she said.

Returning to work in a world of physical or social distancing is “doable” but takes planning, continued Ms Dunkin.As an essential service, Amalgamated Life has continued to operate throughout the lockdown and has now settled into new ways of working.. The majority of employees now work remotely from home, while no more than 10% are in the main office in New York on any given day.

Ms Dunkin and the rest of the pandemic planning team initially had to identify tasks that could not be carried out remotely, such as sorting mail, manual handling of life insurance claims and paying cheques. It also had to ensure those coming into the office were protected.

“We have taken many steps to ensure social distancing and to protect employees in the office, such as staggered work times and shifts, or allowing people to work partially at home and in the office. We also reduced touchpoints, such as leaving doors open – and positioned hand sanitisers every 20ft and at key points such as hallways and elevators,” Ms Dunkin told Commercial Risk Europe.

Many other risk managers now face similar challenges. A growing number of large companies have announced plans to restart operations, including car manufacturers, retailers and even some airlines.

There are a range of measures companies can consider to operate during physical distancing, reduce the density of people in the workplace or minimise contact with customers, according to Zurich Insurance. For example, organisations can stagger shifts, use hotdesking, remote working and videoconferencing technology, as well as invest in automation.

“Companies will need to encourage good behaviour, like hand washing, physical distancing and respectful respiration. Where it is not possible to maintain physical distancing, employees will need to be protected by masks or use screens to provide a barrier. Regular cleaning and disinfecting will also help inspire confidence as well as infection control,” said Fred Myatt, casualty technical director at Zurich North America.

Planning for a return to work is essential, according to Darren Holmes, head of operational risk at Marsh. For example, the UK Health and Safety Executive says it will not relax any rules. This means employers must adhere to provisions whether employees are returning to work from furlough, homeworking or continuing to provide services as an essential worker, said Mr Holmes.

“While the pandemic will no doubt change the way we work in the future, consideration must be given to how employees are integrated back into the workplace. This includes having easily accessible mental health resources, not exacerbating pre-existing health conditions caused by inadequate home working environments, and protecting workers from exposure through continued social distancing and health screening,” he told CRE.

Companies will need to be sympathetic and understanding of employees’ concerns and needs, especially employees in higher-risk categories. However, they will also need to employ some “tough love”, according to Jean-Pierre Krause, global head of risk engineering at Zurich.

“Physical distancing measures have been shown to work in breaking the spread of the virus but they need time and stamina. Management need to encourage it – and it is important to be strict – and document what is being done to show you are following requirements and guidelines,” said Mr Krause.

It is also important to set goals for high-priority activities, and monitor employee efficiency and output to ensure customer service levels are maintained, explained Ms Dunkin. “It is important to set goals for where you would like to be with people working from home,” she said.

“Companies have seen that they can do a lot and be flexible and work efficiently with home working and social distancing,” she added.

Companies should prepare for future waves of Covid-19 as substantial uncertainty around the disease remains, according to Mr Myatt. “There is a possibility of a resurgence of coronavirus cases. We simply don’t know the longevity of immunity or when, and if, a vaccine will be available. So companies will need to plan for a potential return of coronavirus,” he said.

Governments are likely to react quickly and more decisively to future Covid-19 flare-ups, explained Mr Krause. “In Asia, countries learned from SARS and were better prepared and decisive when it came to taking bold steps. By comparison, European countries hesitated because they did not know what to expect. When Covid-19 indicators come back, authorities will react quicker and try to contain it to a smaller scale. The reaction might be harsh but more limited,” he said.

Employers must plan for all eventualities, according to Mr Holmes. Employers should consider scenarios with less heavily populated areas, shift-pattern working to reduce the number of employees at any given time, and rolling out digital solutions for service delivery if necessary, he said.

“We are already helping clients with plans to reopen their premises. Core to this planning is not only protecting employees from further exposure, but also protecting the public at large. Phasing a regularly monitored return-to-work programme will be essential, with key performance measures to signify the next phase,” said Mr Holmes.

As companies return to work in a world of physical distancing, many will be looking further ahead, according to Mr Krause and Mr Myatt. With an eye on the need to manage costs going forward, companies will likely permanently adopt new ways of operating tested during the outbreak, such as remote and home working, they believe.

Companies are not just thinking about the next three months but the next few years, Mr Myatt said. “Crises are a nursery of innovation. Companies will be thinking about what they need to do in the next few months under physical distancing, but also what makes sense for the long term, including opportunities like automation. Innovation and improvements tried in the pandemic will likely persist,” he said.

Remote and videoconferencing technology, for example, will have exceeded expectations at some organisations, according to Mr Krause. “Companies have had to operate in a test environment and have seen what works. Many see they can get further and quicker than in their dreams. Companies will also still need to make money and will look for ways to be more productive, which could also mean fewer people,” he said.

Companies are likely to build resilience into business models and supply chains as a result of the coronavirus crisis, according to Mr Krause. How long this will last remains to be seen, however.

“There will be a risk premium for future events. This has been lost in recent generations, who have cut costs, having not experienced a major event. However, at some point, economists and shareholders will come back and carve out costs and look for economies of scale,” said Mr Krause.