Mactavish, along with other commentators, believes that many firms in the insurance industry have played a less than supportive role in helping their customers through this crisis, but we also understand that in many cases policyholders did not actively seek cover for losses associated with pandemics. In this paper, we set out to explore the extent to which large corporate policyholders were aware of and prepared for events such as the Covid-19 outbreak, and to shine a spotlight on what we consider to be a fundamental failure of risk analysis and management.
- Perceptions of risk tend to emphasise the repetition of prior crises over future likelihoods
- Proximity bias conditions us to focus on risks that are topical rather than those which may have an immediate and material impact
- Annual reports – and by extension, company boards – are not accurately identifying risks, and therefore, failing to mitigate their likely impact
- Institutional investors’ increasing emphasis on sustainability, resilience and stewardship may be too narrowly focused
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