The Federation of European Risk Management Associations (FERMA) has sent a letter to the European Commission urging them to use the COVID-19 pandemic as a lesson for any future pandemics by applying good risk management practices.
Speaking on behalf of FERMA, Dirk Wegener, president of the association, outlines in the letter that FERMA can contribute to this critical discussion, by providing “the necessary theoretical framework from organisational risk management and our experience of managing COVID-19 on the ground in thousands of businesses across Europe”.
He explained that risk managers across the member states are already involved in planning for a successful recovery.
He added: “We will collect the feedback and conclusions of this crisis throughout our membership and report our findings to the commission.”
Wegener also urged the “commission to support the development of public-private initiatives to increase financial resilience against future pandemic risks for our economies and our communities”.
He argued that due to the current pandemic, many European businesses will experience a financial loss that their insurance won’t cover, adding that “pandemic risk, like climate change and cyber risk, is systemic. It is beyond the capital of the private insurance market to provide material capacity for transfer of risk”.
Wegener explained that “it will probably be necessary to create public-private partnerships for pandemic risk on a national basis, but the EU should help member states”.
He commented: “It could, for example, provide expertise, such as modelling and rate setting, and start-up costs. There is also the potential for additional EU support such as an EU backup layer, possibly via the European Stability Mechanism (ESM), allowing the convergence of all national systems to a European standard.”
Europe already has well-established schemes to manage extreme risks like terrorism and natural catastrophe, according to Wegener, using the French Caisse Centrale de Réassurance; Spain’s Consorcio de Compensación de Seguros; and the UK’s Pool Re, as examples.
He said: “These offer possible models for new initiatives, as they have an established process to provide funds to those affected by such risks."
Wegener concluded: “Thank you for considering our ideas and recommendations. We hope to work with you for the protection of Europe and support of the European economy.”