India

Sonjai Kumar, CMIRM, Global Ambassador

The impact in India is relatively low compared to other developed countries because the country took early mitigating action such as screening international passengers, closing the international boundaries, wearing masks and national lockdown.

The next three-six months will be more challenging because the ‘fire is now in different parts of the forest’ and in the absence of medicine; there could be a high risk of engulfing. As containment is the only prevention, it seems that longer isolation is the only potent mitigation available, but this is expensive and damaging in economic terms. We need to choose. Human resource is the driver of the entire economy, so it’s availability is the key consideration. As long as human resources are not available in all key sectors, the economy will not churn. International dependence for the raw material will remain a challenge till the time, the global economy starts coming back on the rails. Food is the key human fuel, this I think that the country will manage given the vast fertile land in the country; some of the other countries depending on import for food will face real challenges given the world is not churning. I think that there are challenges with the current risk management framework. It’s like defining the boundaries of the game and leaving the players to adhere to the rules of the game. The referee (CRO) can only raise the flag. The development of the risk management world between 2008 and 2019 did not bear enough fruits to reduce the impact. The future time will not give enough time to the human race to learn different risk management techniques after every big event over 10 to 15 year’s time. We need to have a leak proof risk management framework that works in every situation. Having such a framework is more important than a ‘Mission to Mars”; I think, it is more important to have “Save the Earth”. Let’s learn from Covid-19, what stopped the world reacting way back in December 2019 when the risk first surfaced? The emerging risk philosophy clearly says to start preparing when you start seeing risk is coming. It did not even require scanning the horizon, the risk was there? Why our risk management framework does not have triggers when response has to be taken rather than leaving to the decision makers to take a decision? We lost precious time.

Barring in the countries where Covid-19 reached in January and February, the world was waiting to spread the fire further and it did. Why don’t our risk management frameworks have buttons which prompt taking immediate actions rather than leaving the actions for the decision makers? It’s like having an immediate sprinkler system as soon as a fire is visible or smoke is there. If we need to protect the world for the next disaster that may come anytime in the presence of global warming, we need to tighten up the risk management framework that everyone must agree as a part of national constitution. The losses to human life and economic cost are enormous, we have to have a sprinkler system and decision making cannot be left to choice.

In the month of March, we were heading to a crisis situation and world started doing the crisis management. Why did risk management fail? Risk management should be like a doctor who can prescribe the medicine which patient takes and is not left to his choice.

There is definitely a value in professionally trained risk managers in a situation which is catastrophic to the world. On one hand you can apply the tools and techniques that you have learnt but also able to identify the gaps. As I said, a risk manager fails if he is not able to raise the flag at the right time and right place but the entire risk management system fails when flags are not acted upon.

Eugene Lehane CMIRM, Chair

The current and ongoing Covid-19 pandemic presents a major threat to the Irish economy. It has had a major impact across all sectors. The immediate action was to protect the health and safety of the population. Non-essential healthcare procedures were postponed with private facilities coming under State control for the period of the pandemic crisis. Government-imposed restrictions led to the closure of residential, child-care, and educational facilities together with restrictions on business activities. Government restrictions sought to reduce the spread of the virus by imposing limitations on non-essential work, travel, physical engagement and stay at home requirements with cocooning for the elderly. This has resulted in most of the population working from home were able to do so with only essential staff permitted to attend for work. It is anticipated that some form of restrictions will remain in place for months with global action elsewhere impacting on trade and movement. The economic impact has seen many businesses unable to respond fully or recover as they might have from other events, however many have adapted to using technology. Ireland has benefitted from a prior positive economic position however face their most significant economic and social threat since the Banking Crisis (2008) which resulted in an IMF bailout. The Economic and Social Research Institute advised that the general government economic balance, which had been expected to be in surplus at the start of the year, is now forecast to be close to double-digit percentage deficit. Key sectors to the economy have seen significant and continued shortfall and despite financial support measures Ireland will be in recession, Businesses will struggle to survive, and many will fail with several organisations already closed or subject financial control protection as revenues fell or stopped. Sectors essential to the economy including aviation, tourism, hospitality, major events have seen incomes fall significantly. Some have adapted with hotels providing hospital accommodation, food industries provided community support and other adaptations. However, at the time of writing over 1,000,000 people received total or partial income support from the State with additional measures taken to support businesses including payment and grant schemes. The Central Bank of Ireland indicated that small to medium enterprises will need more than €5.5bn in financial support added to which the government has already provided financial support. The Financial sector has been engaged to support individual and businesses in terms of cash flow, mortgage/loan payment deferrals and assistance, insurers committed to supporting prompt claim settlement and premium refunds, as appropriate.

Organisations are facing unprecedented operational challenges. The key issues organisations have been addressing include complying with maintaining operational processes and procedures, health and safety, technological resourcing, data protection and measures to support customers and ensure adequate supply chain protections especially for those organisations involved in global trade activities. As an open economy, Ireland is exposed to significant global risks and the implications of Brexit especially where no deal is reached have been exacerbated further by Covid-19 and the potential recovery options, The political environment following the recent General Election has added to the complications and Ireland is currently subject to administration by a caretaker government. However, there is general support for the approach taken to overcome the crisis. As lockdown restrictions ease it is anticipated that the global trade and political environment will change together with societal impact as perceptions to non-economic issues including wellbeing, quality of life, measures of individual success, Individuals have connected/reconnected with family, communities with remarkable support and empathy being displayed to those suffering or exposed through front line activities.

There is no doubt the role of risk management will see a growth in importance and certainly should have the skills experience knowledge and global reach to support organisations to survive, grow and expand. The Institute of Risk Management is well-positioned through its diverse experienced and educated membership to support guide and promote its member organisations and influence other groups to become more resilient in trade, finance, economics, governance, and culture. Boards will have the opportunity to oversee and connect with their organisations and this should lead to a better understanding of risk exposures and how to improve the efficiency/effectiveness of risk management. This should lead to improved decision making and deliver increased certainty to support stakeholder’s expectations. Risk management should not be a functional role or a tool used by other professions, it mustn’t be limited as a function of audit, compliance and financial but an integral framework around which an organisation’s strategy is developed to achieve its objectives to the benefit of its stakeholders, lessons learned must be built into organisation’s genetics to survive negative consequences and take advantage of positive outcomes. In conclusion, risk management provides the ability to look forward and adapt to an ever-changing environment with perhaps a more equitable and considerate approach bringing a more thoughtful culture in business and society. Risk management is best positioned to drive these changes through thought leadership training and education. This is vital to recovery for Ireland and ensure organisations are more resilient.

As of May 26th, 2020, there are 56349 confirmed cases of Covid–19 in Pakistan, first case being reported on February 26th, 1167 deaths have been reported whereas 17482 people have recovered. The spread of Covid–19 in Pakistan is extremely worrisome, especially when the country is already facing a balanceof-payments crisis, revenue shortfall, is under a strict IMF programme and challenged by other economic vulnerabilities.

A nationwide shutdown is already harming the most vulnerable in Pakistan – including those working in the country’s substantial informal economy, food insecure populations, and those living in slums outside the densely-populated urban centers. The most immediate impacts of Covid on Pakistan has been the -30% crash in the stock exchange and massive capital flight from the country leading to a -10% devaluation of the currency. Over the next few months, we expect lower current account deficit, especially after relief given in the foreign debt repayments. However, lower GDP growth and elevated fiscal deficit are more certain outcomes of the current crisis. State Bank of Pakistan (SBP) has already revised the GDP growth rate to 3% from an earlier estimate of 3.5% for the 2020 fiscal year. The Asian Development Bank also lowered its projected growth rate to 2.6% from an estimated 2.9%, while the World Bank has revised it to 1.1%.

Official assessments estimate an initial loss of PKR 2.5 trillion (around $15 billion) to the economy. They also estimate between 12.3 to 18.5 million layoffs across different sectors of the economy in the aftermath of the partial or complete shutdown, impacting mostly daily-wage workers, and those employed in the agriculture sector. 2015 statistics state 24.3% of the population in Pakistan lives below the national poverty line. With the expected layoff figure, the ratio could jump to 40% by June 2020. Even with fewer resources, Pakistan took timely and rigorous measures to combat and control the spread of the virus:

> Enforcing strict lock-down measures across the entire country > 35 specially designated hospitals for handling Covid cases with a capacity of 23,557 isolation beds > Setting-up of 35 new laboratories for testing (earlier 15) > 23,557 quarantine facilities in 139 districts > PKR 50 billion ($299 million) has been set aside to purchase medical equipment such as ventilators, PPEs, testing kits > Testing capacity has also been enhanced from 30,000 to 280,000 and is expected to be further enhanced to 900,000 within April > Establishment of Covid–19 Relief Fund to receive donation for the welfare of publics > Social network helplines launched in seven local languages > Using telecommunication sector to create awareness like sharing information through caller tunes, SMS > Contacting suspects of confirmed cases through mobile tracking and pushing them to get their tests done

Pakistan has unveiled a PKR 1.13 trillion ($6.76 billion) rescue and stimulus package with a good balance between providing direct assistance to the vulnerable and protecting industry and businesses.

In order to limit the social impact of Covid and ensure food security, the government has temporarily abolished all taxes on food items and has announced a significant reduction in oil prices. A sum of PKR 50 billion ($299 million) has been earmarked for government-run utility stores to ensure the constant availability of food and other necessities. PKR 280 billion ($1.68 billion) has been allocated to ensure wheat farmers do not face cash flows and to ensure smooth wheat procurement. Country’s civil society and business sector are also coming forward to supplement the government’s efforts in this testing time by helping the vulnerable segments of population through private philanthropic efforts. The sudden closure of large industries, small and medium businesses, ports, airports and transport have almost jammed the wheel of the economy. Export-driven industries are severely impacted due to disruptions in the global supply chain, being extremely dependent on imported raw materials. In addition to that, there is a substantial fall in consumer demand due to lockdown across the country. If the already fragile economy of Pakistan falls into a recession, business firms will be forced to either operate below capacity or shut down operations. Industries impacted by the demand shortage or supply disruptions, especially from the manufacturing sector and those with cyclical earnings, will have to review their business strategy and fiscal outlook for the coming months, reassessing their investment decisions, supply chain assurances and hiring requirements etc. Setting the right foundation to kick-start the economy is imperative for the government: > Economic stimulus package containing tax breaks, financial support via utilities, fuel and transport subsidies, concessions and tax refunds to protect exporters and businesspersons > Package worth PKR 100 billion ($600 million) for SMEs, which form close to 90% of all enterprises in

Pakistan and generate 40% of non-agriculture employment > SBP’s Temporary Economic Refinance Facility to fuel new investment by offering subsidised loans to the manufacturing sector and Refinance Facility for hospitals at 3% for five years > SBP has also reduced the interest rate to 9%, down from 13.25% earlier

Covid–19 has demonstrated the value of ERM and risk preparedness for organisations from all sectors, of all sizes and from all across the globe. The best-prepared organizations will have many business advantages over the less-prepared ones as they minimize the operational and financial disruptions caused by the current crisis. Risk managers are, therefore, at the heart of crisis management activities in the current situation. With their forward-thinking, and focus on scenario analysis and impact assessment, they can help lead the discussion around effectively mitigating risks and grasping opportunities. Information awareness is also key for successful risk management – risk managers can ensure relevant information is disseminated to all the stakeholders in a timely manner so mitigation actions can be taken accordingly. Professionally trained risk managers truly understand the value of being prepared, and the importance of crisis management and business continuity plans. Their methodical approach to risk identification, assessment and response is an invaluable asset that allows organisations to respond to a crisis effectively and make them resilient. Their holistic approach and an ‘enterprise level’ view allows a multi-faceted perspective to risk and opportunity management, something that may be missing in a siloed or haphazard approach to risk management. At our organisation, all three members of the ERM Department are IRM Certified. The contributions from the ERM Department have been critical in the current crisis, from taking the lead in the development of a Covid–19 response and preparedness plan to minimize impact of Covid–19 on employees’ health and Company’s operations, highlighting uncertainties emanating from Covid–19 and discussing how to best manage them and cater for them in our business plans and budgets.