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April 5, 2020

The Business Response to COVID-19: #Pandemicwishing?

In 2019 Duncan Austin coined the term "greenwishing" to describe environmental and sustainability initiatives with little likelihood of material impact. Does #pandemicwishing now need to join the business risk management vocabulary as well?

The COVID-19 pandemic has overwhelmed the conventional risk management strategies that companies may have had in place to deal with such an event. That's because COVID-19 represents a systemic risk, requiring systemic preparedness and a systemic response. Traditional business risk management strategies don't deliver either.

In all fairness to business decision-makers, the responsibility of preparing for and responding to a pandemic has always rested with public health authorities. Given the ruinous business costs of COVID-19, however, and the failure of public health authorities to effectively respond to COVID-19, should business have done more to ensure that the necessary resources were allocated to pandemic preparedness?

The reality here in the U.S. is that we are simply not doing what would be required to get this pandemic under control in the next six months, much less the next four weeks. Absent some kind of miracle, whether a drug that turns out to kill the virus, or an antibody treatment that substitutes for a vaccine until a vaccine is available, it is very hard to see how the U.S. comes out of this crisis anytime soon.

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Systemic risk management historically has not been seen as a business priority. However, COVID-19 has exposed a material business risk that has been ignored. COVID-19 is a wake-up call for business recognizing it has a legitimate risk management interest in promoting readiness for systemic risks like COVID-19. But now that the pandemic is here, what is the role of business in responding to the pandemic?

Here's where #pandemicwishing comes in, a term that effectively represents the U.S. response to date to COVID-19. We've sort of tested. We've sort of isolated. We've sort of tracked. The President suggested that the U.S. economy would be up and running again by Easter. That date was perhaps fitting, since having COVID-19 under control by Easter would have required nothing short of a public health miracle. It was #pandemicwishing at its best.

Now the U.S. strategy of self-isolation has been extended to April 30th. But we're still only sort of testing in the U.S., as compared for example to Germany's (U.S. equivalent of) 1.4 million COVID-19 tests a week. We're sort of self-isolating, except for letting people in several states congregate in mega-churches because that's an "essential" activity. And I have no idea how much tracking is even going on.

The failure of public health authorities to be prepared for the COVID-19 pandemic, after years of warnings from public health experts, will go down in history as an epic policy failure. In hindsight, and given the catastrophic business costs of the pandemic, it also reflects a failure of business risk management foresight and initiative.

The failure of public health authorities to be prepared for the COVID-19 pandemic, after years of warnings from public health experts, will go down in history as an epic policy failure.

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But now that the pandemic has arrived, what is the role of business in promoting a response that goes beyond #pandemicwishing, particularly given the potentially catastrophic business implications of a #pandemicwishing based strategy, no matter how much money Congress throws at the problem?

Will companies exercise their considerable power at the state and federal levels to push for an effective pandemic response? Although it requires stepping outside their business comfort zones, it's arguably the only thing that will save many of them, and the rest of us, from the long-term consequences of #pandemicwishing.

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COVID-19: The Weakness of Traditional Risk Management Strategies

What Does COVID-19 Tell Us About Global Business Risk Forecasting?

Mark Trexler

Mark has more than 30 years of regulatory and energy policy experience. He has advised clients around the world on climate change risk and risk management. He is widely published on business risk management topics surrounding climate change, including in the design and deployment of carbon markets. Mark has served as a lead author for the IPCC and holds advanced degrees from the University of California at Berkeley.

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