Kessler: Pandemic risk was ignored

The vast majority of the economic fallout from COVID-19 can be traced back to decisions by the authorities, states the chief executive of Paris-headquartered global reinsurance company SCOR in a hard-hitting expert view column.

The pandemic is an ’exogenous’ shock from outside the economic system, which was not anticipated by businesses or governments, he notes.

“Decisions-makers in every area have simply been making things up as they go along,” writes Kessler. “A pandemic was a major risk factor that had been ignored, downplayed and dismissed. The failings of public risk management are plain for all to see. The lack of preparedness has driven up the cost of the pandemic in the strict sense of the term.

He anticipates the most elastic economies will bounce back more rapidly than the most rigid.

”There may be a real rebound, akin to the release of tension from a spring, in a number of variables. That’s most likely true for consumer spending, which should roar back once the pandemic comes to an end. Supply is more sluggish and will take longer to regain its pre-shock level.” 

Kessler notes that economic trends have varied widely from one industry sector to the next. ”Certain industries, among them restaurants, tourism, airlines, and airports, have been dealt heavy blows, while others, such as telecoms, gaming, home deliveries, have boomed.”

“Things won’t get back to normal any time soon,” he concludes. “We will all have to help foot the very steep bill for the pandemic, which amounts to around 10% of national income. We are still looking for answers to many questions: will we have to start paying straight away, further ahead… or never?”