COVID-19: what will it mean for the future of risk?

Even as the world prepares to continue to roll-out COVID-19 vaccines, social distancing will continue for the foreseeable future, as will the potential for further business interruptions. Businesses must remain agile not only in addressing the business risks which have already materialised during 2020, but they must also look ahead in anticipating new and emerging risk pools as a result of COVID-19.

This report focusses on the important task of looking at the road ahead in order to support businesses in their strategic decision making. From the new cyber threats which will become more apparent in a world where digitisation has accelerated, to the need to redefine health and safety ‘at work’ in a world where many people will find themselves working from home; business leaders are faced with a rapidly changing risk landscape.

Our research identified five key risk themes that have implications and represent both challenges and opportunities for businesses, insurers, and wider society. This will assist in moving the conversation forward as we look beyond COVID-19, highlighting the important need to reshape the dynamic relationship between companies, households, and insurers.

In summary, these risks are:

New cyber threats

As we all come to adapt to a more digital lifestyle, the associated cyber risks will grow and become more complex in nature. Our digital lives are only as secure as our digital hardware and software.

• According to our survey 65% of the workforce had worked from home at least some of the time during the pandemic. This figure is higher than the 49% recorded in official data in April 2020. This difference is likely to reflect the fact our survey was undertaken in August 2020, several months into the pandemic.
• In light of the move to remote working, a huge stepchange in our approach to managing digital risks is urgently required. Among SMEs, just 7% have cyber risk insurance in place.
• This is particularly important given that 44% of the workforce expect this shift towards home working to become permanent. Among those that spent some of the lockdown period working from home, 90% envisage working to at least some extent postCOVID-19 (26% working entirely from home and 64% splitting time between the office and home).
• The ‘working from home’ trend has particular implications for financial and professional service businesses, with workforces in both among the most likely to have worked from home during the pandemic.
  
  

Maintaining professional standards in a digital working environment

A more digital world has other significant impacts for certain groups of workers. While the desire for an increasingly digital workplace is on the rise, the ability to accommodate flexible working needs, maintain professional competence, train and develop new joiners and managerial oversight of remote workers presents new challenges.

• Over a quarter (26%) of those in the professional services expect to spend all their time working remotely. Two thirds (67%) anticipate that they will work remotely for some of the time.
• As professionals such as doctors and lawyers migrate from face-to-face to digital delivery models, our research demonstrates the need for employers to support those workers in new ways. 34% of those who worked from home during the first lockdown claimed that they made more mistakes in their day jobs, a figure which rose to 44% among those working in financial services.
• Nearly half (48%) said that this may be linked to the fact that they now receive less managerial oversight and felt that the quality of their work is better when working on-site. Any failure to address these new challenges risks creating the conditions for increased professional negligence and professional indemnity claims.

Redefining health and safety ‘at work’

Working from home presents other more subtle dangers compared to office settings. Employers have spent vast amounts of money over many years implementing the measures laid out by Health and Safety at Work legislation, by creating safe workspaces with ergonomic office furniture, occupational health risk assessments and adequate management supervision. As our homes suddenly become a place of work for millions, we are entering a ‘ground zero’ in terms of health and safety and workplace issues. Never before has it been so important to talk about the legal obligations in the workplace. 

• Workers reported a series of behavioural changes which are likely to impact on their long-term health and wellbeing. 56% said that they walk around less when working from home with 53% also saying that they take fewer screen breaks. 
• Nearly half (48%) already report that they have more aches and pains (e.g. lower back and shoulder pain) since they started home working.
• To date, very few employers have sought to engage their workforce in understanding the nature of this challenge. So far, only 38% of office workers have been offered ergonomic furniture for the purpose of working from home.
• Mental wellbeing has also become a more pressing concern with 47% finding it harder to switch off in the evenings, 43% finding it harder to sleep at night, and 40% feeling overworked and more anxious. Only 20% of workers have been offered online wellness and wellbeing tools.
  
  

Public liability risks on mass transport

At the outset of the first lockdown, all modes of transport, except for cycling, witnessed large drops in daily volumes. As the economy reopened, private vehicle usage rebounded reflecting continuing public concerns around public transport systems.

• Nearly half (45%) of those who rely on public transport to get to work said that social distancing and public health were major concerns to them indicating why so many workers continue to work from home.
• It also helps to explain why the number of journeys made by private vehicles has bounced back so quickly following the first lockdowns with 27% expecting to use their car to travel to work more in future compared to before COVID-19. The increasing use of personal vehicles for professional purposes creates potential coverage issues around motor insurance.
• Longer-term trends are also emerging with nearly one third (31%) arguing for governments to introduce car scrappage schemes to encourage people to switch from petrol or diesel cars to hybrid or electric vehicles. The growth in new modes of transport, such as e-bikes and e-scooters, also creates new third party liability issues likely to impact most acutely on commercial fleet operators.
  
  

Employer liabilities on public health issues

As we ease back into (and back out of) returning to the office to varying degrees, the emphasis on employers to provide secure working spaces – which may include considerations around ‘safe’ colleagues – will be paramount. This presents challenges for small and medium-sized employers, in particular. Adapting smaller working spaces to social distancing measures might not be physically possible.

• The financial costs associated with adaptions, such as providing personal protective equipment, might also prove prohibitive. Few small employers have undertaken detailed risk assessments to capture the new public health risks.
• Currently just 27% of employers claim that they have been offered PPE by their employer. Similarly, low numbers have been offered free COVID-19 tests (25%) and daily temperature checks (26%).