However, the membership organisation believes the biggest potential cost on businesses is reputational
The financial services sector has been “acutely impacted” by the coronavirus pandemic, with resulting costs on both businesses and society as a whole expected to run into the trillions, according to operational risk association ORX.
Dr Luke Carrivick, head of research and information specialisms at ORX, explained: “In our regular conversations with over 100 banks and insurers from around the globe, we see how the financial services industry has been acutely impacted.
“From stretching the resilience of global supply chains, to seeing cyber criminals exploiting public fears around the pandemic in fraud campaigns, the investment to manage the fallout of coronavirus has been significant. This inevitably has a knock-on effect on all business and society as a whole.”
Although detrimental financial implications resulting from the Covid-19 pandemic have been paramount at many businesses, Carrivick noted, however, that the potential biggest cost to organisations could in fact be reputational.
“In the face of considerable public scrutiny, failure to ‘do the right thing’ could be extremely costly for businesses, particularly for the financial services industry which has had its fair share of public scandal,” he said.
“That’s why we’re seeing banks and insurers making real efforts to support customers in the face of an impending downturn and facilitate government financial support schemes.”
On the flip side, Carrivick added that “although coronavirus had the potential to cause financial apocalypse, this appears to have been avoided”.
He continued: “Businesses have had to rapidly respond in the face of unprecedented financial and operational stresses, but efforts to ‘keep the lights on’ and the world moving appear to have been largely successful so far.
“In key financial services, for example, we’re seeing that payments are still working and insurance claims are being paid.”
But, Carrivick said that “very few institutions” expect the world to return to how it was pre-pandemic. Speaking with risk managers, he even quoted ‘BC’, meaning before coronavirus, and ‘AC’, referencing after coronavirus, as becoming known market terms.
Despite this gear change, Carrivick added that there are operational positives emerging from this unprecedented situation, such as efficiencies in digitalisation and remote working – this could, in turn, reap benefits for adaptable organisations.
He said: “Instead of a return to established ways of doing things, we see the emergence of a new norm, and it’s not all doom and gloom.
“Some of the significant costs that have been incurred will of course be written off, but some will have created new efficiencies, such as investment in digitalisation and in virtual working.
“Whilst we may be entering an economically tough time, we may well see those businesses who have rapidly transitioned to the new normal, and who come off well reputationally, thrive in the new post-coronavirus world.”
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