No risk management system can ever guarantee a risk-free environment. There are always unknown risks. We all know they exist. But what we cannot know is what form they will take when they hit us and what consequences they will cause.
The coronavirus outbreak that erupted in China’s seventh-largestcity of Wuhan was not on the radar screen of Chinese and global health authorities. Yet, it was as recent as 2003 when Sars, another deadly virus, hit the world.
The coronavirus outbreak has still not reached pandemic proportions. But it may do so in the coming weeks.
The Chinese government has warned that the spread of this virus may be quick and broad, causing a medical as well as an economic emergency for China and the world. News about causalities is being continuously updated. It is already sure that the infection has spread to all continents including Europe.
Health authorities in Malta have issued a guarded reassurance that so far there are no reasons for people to panic. Their advice to people who have recently travelled to China and are experiencing flu-like symptoms is to call the public health department straight away for guidance and assessment.
One assumes that the local health authorities are in touch with their international counterparts to define a strategy on how best to deal with a possible spread of the infection to Europe.
While a serious outbreak in Malta is still a distant possibility, it would be in order for the authorities to give reassurances that the country has the preparedness and resources to deal with it, especially if it were to hit during the influenza season when health provision is already stretched.
On the economic side of the equation, markets have reacted with initial panic on the likely effects of this viral outbreak. The major European bourses posted broad declines as shares in travel, luxury goods and mining sectors tumbled. The progress of the coronavirus and the speed with which a vaccine can be discovered to control it will determine the extent of the damage that this outbreak will cause to the global economy.
Reports that the Chinese political authorities were slow to respond to the spread of the outbreak show how vulnerable and interconnected the global economy is to administrative failures in one country.
It was only a month after the first reports of a new virus emerged in Wuhan that the Chinese authorities shut down air and rail transport links into and out of the city. When governments try to monopolise disease-related information on the pretext of avoiding mass panic they ultimately cause more damage.
One can only hope that the number of human casualties resulting from this viral outbreak will be as limited as possible. But the long-term economic consequences will be more challenging to manage. China, already suffering from falling economic growth, may find that its tourism industry will suffer. Chinese consumers will be less inclined to buy goods from European and US companies as their spending power will be affected.
They may also want to travel less to Europe and the US. Investors are already dumping their shares in oil companies as the impact of the outbreak on air travel is bound to be significant. At this stage, one can only hope that the coronavirus emergency is not made more complicated by other geopolitical risks.