Written by Claude Hamman, Head: Specialist Risk Advisory at Indwe
Going back in history, there have been many defining moments for human beings over the centuries of our existence on planet Earth. In recent times we have survived The Great War, The Great Depression, World War II and The Great Recession. Now, we are facing The Great Infection, as the COVID-19 crisis of 2020 sweeps across the planet.
If we look at viruses specifically, the Black Death was the most fatal pandemic recorded in human history, resulting in the deaths of up to 75-200 million people in Eurasia and North Africa, peaking in Europe from 1347 to 1351. The Spanish Flu was an unusually deadly influenza pandemic lasting from January 1918 to December 1920, infecting 500 million people – about a quarter of the world’s population at the time.
Many have called this event a Black Swan, defining it as unforeseeable, unpredictable, unexpected and devastating but hindsight will show that this was a Grey Rhino event. Grey Rhinos are hard to miss as they follow a predictable path and have numerous warning signs. The important distinction is that Grey Rhinos give us the opportunity to respond.
Unfortunately, history will show that humanity chose not to respond until it was too late, resulting in the widespread global outbreak of COVID-19. Many countries became the proverbial ostrich, sticking their head in the ground and ignoring the signs of a brewing global crisis. Others initiated crisis plans and accelerated the execution of response mechanisms, in order to limit the spread of the virus, and they are reaping the benefits.
Our environment dictates our reality
In South Africa we learnt that even a proactive approach is extremely difficult, when you have large groups of people who are densely populated in areas with poor infrastructure, housing shortages and little access to water and sanitation services. Our environment dictates our reality and the reality is that prevention and detection methods that work in a suburban community in Europe or Johannesburg, do not work in township communities. We often adopt plans with control mechanisms that have worked in the past and for others, but even the best plans fail when tested against the reality of the situation. Regardless of the environment we are facing, each one of us has the opportunity to face the lockdown and prepare for a post-lockdown world.
The COVID-19 crisis has provided humanity with perspective. Perspective that only comes around once every century or so. This perspective will define what it means to be human, in a world where economies and people have been locked down to save lives. After several weeks of being confined to one location, those with access to the internet have (many for the first time) realised the power of this tool and its ability to connect people and keep us engaged. Some would have thought it impossible to earn a living in a world where there is little or no human contact allowed but the reality is that it is possible and even highly effective in some industries.
Human beings are remarkable in their ability to adapt and thrive no matter the environment and regardless of the circumstances. There will always be extraordinary human beings around us. The feats of humanity (during lockdown) include one person cycling for 24 hours, completing 770km on a virtual program connected to a Bluetooth trainer, and yet another running for 58km for 8 hours around their house. Average people have become teachers and coaches, while others rediscover online learning or the value of a good book.
What happens next?
The post-lockdown period will involve a series of events which unlock supply chains and services over time. For many people who are able to operate remotely, the post-lockdown period will be the same as during lockdown. In this “new normal”, some people will never go back to the office, as life becomes more virtual and we are able to connect, learn and engage in different ways.
The question many people have now is what happens next? Uncertainty continues to evolve from one week to another, due to the complexity and interconnectedness of the risks we face. There are some immediate risks we must confront as a country, which need to be effectively evaluated and controlled to drive a positive outcome for the future.
Risk is defined as the effects of uncertainty on objectives. Plainly, what are your objectives and what are the uncertainties that will impact those objectives, either positively or negatively? This period of lockdown is arguably a time where the level of uncertainty is at a high point. A recent McKinsey article spells out the challenge we face as a country – the balance between saving lives and saving livelihoods is critical as we move into an extended lockdown period.
The degree of risk interconnectedness and the rate of change we are experiencing further increases the complexity of each of the risks we deal with on a daily basis. This is a systems wide crisis. It’s a single risk that has triggered every other risk and, like a complex spider web, one thread cannot be untangled from the web otherwise it will deteriorate completely. If, however, we can understand the dynamics of the system, then we can save lives and ultimately reforge our future.
Let’s look at some of the key risks we face:
- Loss of lives due to the widespread outbreak of COVID-19 and the collapse of the healthcare system due to the inability to cope with the severe demand for healthcare services.
- Loss of livelihoods (because of the lockdown) leading to the collapse of the economic system, social unrest and riots resulting in the complete breakdown in social compact between government, business and civil society.
Most risks can be sub-categorised under the two primary risks. Addressing any one of the sub-risks will impact the entire system or web. These include:
- Inadequate enforcement of law and order during lockdown.
- Sustainability and practicality, given the South African societal context, of the lockdown rules.
- Continued government service delivery post-lockdown (to Dec 2020).
- Lack of focus, urgency and capability on the future economic rebuild post-lockdown.
- Supply chain activation, stability and security.
- Inadequate health infrastructure and resources (healthcare workers, critical items including hospital beds, ICU beds, PPE for health workers, ventilators, sanitisers, temperature monitoring and test kits).
- Failure in critical infrastructure (energy, water, sanitation, gas supplies, IT, payments cycle, cash availability, excluding health).
- Disjointed Southern African approach and cross provincial impact of lockdowns, placing additional strain on South Africa.
- A secondary catastrophic event occurring during the lockdown and post-lockdown period i.e. severe storms, cyber-attacks and large-scale fires.
- Key members of leadership in government and business are incapacitated by contracting coronavirus, exhaustion, or other medical invalidities and are unable to carry out their duties.
- Lack of structured interface between government, business, SMMEs, labour and civil society.
- Fair, transparent and equitable distribution of social funding (Solidarity Fund, UIF, Health Fund, Employee Disaster Benefits).
In a recent Dynamic Risk Assessment (DRA) by KPMG, the analysis pointed out that the fair, transparent and equitable distribution of social funding was considered a key risk that could impact several other grouped risks if not effectively executed or controlled. The DRA also pointed out that different risks are highly interconnected, these risks are unlikely to play out in isolation and will trigger additional risks or at a minimum, increase the likelihood and impact of the connected risks.
Most concerning is the velocity of the risks, which are likely to impact within 6-8 weeks if nothing is done to address these risks specifically, and the result will deepen the impact of the primary risks i.e. loss of lives and livelihoods. Significant efforts are already under way but a lot more will need to happen to ensure that these risks are effectively addressed, in order to mitigate the threat and seize the opportunities.
A post-lockdown world
Opportunities emerge during times of uncertainty. History shows that organisations that emerge from a time of crisis, even with a slight lead, are generally able to maintain and strengthen their position in the period after the crisis period. Technology has emerged as a key opportunity, specifically the use of drone technology, large scale online learning and live education streaming, to name only a few. The digitisation of education will be a key part of the world economy as we transition into the post-lockdown period, especially when combined with communication infrastructure investments. This means that the best teachers are able to deliver world-class content anywhere in the world. Our perspective has changed and with our ability to adapt to our environment, we can combine human resilience with technological advancements to create a better future for generations to follow. What other opportunities will emerge from this crisis?
The night is often darkest just before the dawn. There are opportunities for those who are willing to invest time and energy to manage uncertainty and prepare for the future. As a leader, now is the time to connect people to a deeper sense of purpose and to lead by example, showing that even though it is tough times now and the future is still uncertain, with the right attitude and plan there will be a future for us all. This does not mean sugar-coating the truth, rather it’s about delivering the facts about the current challenges we face and inviting people to join us on a path to greater resilience and a shared purpose.
Indwe is an authorised Financial Services Provider. FSP: 3425