Page 13 - RMAI Bulletin July 2024

RMAI BULLETIN JULY 2024

hard, with a prolonged economic downturn affecting duction and supply chain, among others, as a result of
earnings at the beginning or middle of their career. COVID-19-related issues from business interruptions.
These impacts have a cascading effect on the ability
This generation has already suffered the fallout from to meet contractual obligations.
the global financial crisis and austerity. Many have
debts from university fees or have been unable to af- Considerations:
ford independent living. The pandemic and subsequent Companies should consult their legal advisors and re-
downturn could further exacerbate the view their contracts to determine what, if any, contrac-
intergenerational divide. tual obligations may be impacted and the rights and
remedies they have as a result of the delayed perfor-
It is also possible that the frustration of millennial and mance of contracts.
a distrust of governments could foster social unrest or
politically motivated violence, leading to possible prop- Companies should also take (and document) reason-
erty damage or other insurance impacts, the report able steps to mitigate the impact of COVID-19. If com-
warns. panies cannot fulfill their contractual obligations, they
may need to quantify the amount of financial damage
Considerations: and the impact on their long-term business relation-
Government should come up with a sustainable plan ships.
which should not only help young generation to live
their dreams but help to nurture the growth of a coun- Companies should review their existing insurance poli-
try. We need to come up with affordable solutions for cies to find out whether any losses they incur relating
personal protection. If the insurance industry doesn't to COVID-19 can be covered under existing terms or
help here, it will lose out in the end. whether they need to adjust their coverage for addi-
tional protection.
6. Business Interruption
The Risk: 8. Impact on Supply Chain
Man-made disruptions (such as acts of terrorism, civil The Risk:
unrest or cyber-attacks) or natural disasters (such as Governments around the world have begun to take
hurricanes, earthquakes, wildfires or floods) both dis- measures that limit the movement of goods and
rupt business operations. Whether the damages are people across borders. Restrictions imposed by the
physical in the case of natural disasters or nonphysi- Chinese government, for example, have included quar-
cal as in the case of cyber, the financial losses stem- antine mandates and factory shutdowns across the
ming from such interruptions can be significant. country. As China is the factory of the world, supply
chains are deeply affected.
Considerations:
Leaders need to identify areas of vulnerability from Considerations:
external forces that could disrupt operations and ex- If management believes there is a risk of disruption to
tent of potential losses, as well as the probability of their supply chains, they should take the following
an occurrence. steps, among others, to mitigate the potential conse-
quences:
Organizations should consider proactive steps (includ- a. Understand the behavior of disruptive models ap-
ing risk engineering, risk financing and change man- plied to the supply chain and establish the point
agement) to handle business interruption risks. in time at which such disruption is located.

7. Impact on Contract Compliance b. Consider re-prioritizing the production line to re-
spond to market impacts associated with the
The Risk: threat, increasing safety stock levels, and stockpil-
Companies are experiencing an impact on sales, pro- ing essential supplies and resources.

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