The global economy finds itself in a state of uncertainty in the face of the novel coronavirus (COVID-19), with S&P Global now forecasting a global recession this year. [ref 1]
In the past three months, we have seen the evolution of an oil price war between Saudi Arabia and Russia[ref 2], the S&P 500 index of US companies evidence a maximum peak to trough variance of 33.9%[ref 3], and Chinese industrial production drop by 13.5%[ref 14] — all collectively highlighting the breadth of the outbreak's impact. Combining these macroeconomic factors with the fact that in the UK 45% of businesses reported lower than expected turnovers[ref 5] (likely through a distinct lack of consumer expenditure) means that many organisations are very likely entering a period of severely restricted free cash flows.
In such uncertain times, organisations may face an unenviable set of conflicting factors: risk appetite is reducing, but the need to control external costs is vital — all whilst a transitioning insurance market introduces unfamiliar volatility into any cost-benefit analysis. In this dynamic risk environment, how can organisations equip themselves to make the most capital-efficient use of insurance?
Read our latest adviser to find out how organisations can manage the impacts of the COVID-19 crisis and beyond through an analytically informed review of their risk financing strategy.
3. 19 February 2020 (3,386.15) to 23 March 2020 (2,237.40).
4. National Bureau of Statistics for China.
5. Office for National Statistics.