Page 158 - COVID-19: The Great Reset

The collective quest for resilience also favours the sports
industry, closely related to well-being. As it is now well understood

that physical activity greatly contributes to health, sport will be
increasingly recognized as a low-cost tool for a healthier society.
Therefore, governments will encourage their practice,
acknowledging the added benefit that sports constitute one of the

best tools available for inclusivity and social integration. For a
while, social distancing may constrain the practice of certain
sports, which will in turn benefit the ever-more powerful expansion
of e-sports. Tech and digital are never far away!

Four industries that have been grappling with a host of
particular challenges posed by the pandemic crisis illustrate the
diverse nature of resilience. In banking, it is about being prepared
for the digital transformation. In insurance, it is about being
prepared for the litigations that are coming. In automotive, it is

about being prepared for the coming shortening of supply chains.
In the electricity sector, it is about being prepared for the inevitable
energy transition. The challenges are the same within each

industry, and only the most resilient and better prepared
companies within each will be capable of “engineering” a
successful outcome.

Because of the nature of their activity when an economic crisis
happens, banks tend to find themselves in the epicentre of the

storm. With COVID-19, the risk doubled in intensity. First, banks
have to prepare for the possibility that the consumer liquidity crisis
morphs into a major corporate solvency crisis, in which case their
resilience will be severely tested. Second, they have to adjust to

the way in which the pandemic is challenging traditional banking
habits, a different form of resilience that requires further capacities
of adaptation. The first risk belongs to the category of “traditional”
financial risks for which banks have had years to prepare. It is

being dealt with through capital and liquidity buffers that have to
be robust enough to withstand a major shock. In the case of the
COVID-19 crisis, the test of resilience will come when the volume
of non-performing loans starts rising. The situation is entirely

different for the second category of risks. Almost overnight, retail,
commercial and investment banks were faced with an (often)

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