Risks are ever present, in our personal lives as well as in business. But what is a ‘risk’?

Now more than ever is a good time to understand this term, not fear it and rather manage it in a proactive and efficient manner.

The term ‘risk’ can be described as the probability of an event and its adverse consequences. Risk management involves identifying, controlling and minimising threats that could have a negative impact on, a person’s life or, business objectives.  

Currently there is a global attempt to implement several risk management techniques to contain and mitigate the spread of the novel coronavirus disease (COVID-19) which has to date infected over 700,000 people worldwide. It has and continues to be, large scale risk management at its best.

In the insurance industry, insureds, insurers and their agents can employ a risk management technique called loss control which seeks to reduce the possibility that loss will occur and/or reduce the severity of those that do. Many of the role players in the insurance industry fail to recognise the positive impact of proper risk management. For the insurer, it reduces the possibility of claims, for the broker, it increases profitability and builds relationships as exposures are resolved and claims reduced, and for the insured, exposure is decreased which results in reduced loss and allows for objectives to be met.  


So, what can the insurance industry learn from the world about managing risk.

There is one thing for sure, COVID-19 is here, it is hidden, and it is growing. The same can be said for risks exposures for businesses, which is one of the main reasons that companies take out insurance. However, it is important that companies do not just take the stance that because there is insurance, the risk has been transferred.

There is a clear difference on how the East and the West of the world have approached the risk management of the COVID-19 outbreak. On 21 January 2020, the number of new diagnosed cases of COVID-19 inWuhan China exploded to 100 but experts say that in reality the number was likely 1,500. Two days later the number grew to 400 new diagnosed cases but again in reality there were around 2,500. This was the point at which authorities shut down Wuhan. The rest of China and several other Eastern countries followed Wuhan’s lead and took drastic measures, with each having the potential to grow exponentially but thanks to the measures taken, the spread of the virus slowed down. The Western world, had a full month to put risk management techniques in place to prevent, contain and mitigate the spread of the virus. But this did not happen, which resulted in exponential growth of infection numbers surpassing almost all the Eastern countries.

Exponential growth can be a difficult concept for the mind to grasp, an example being that of compound interest which is simply interest on interest. With exponential growth what we know to be true is not always the reality. What this does is lead people, businesses and governments to make substandard decisions, like waiting until a crisis is self-evident before putting measures in place. A good example of this is, as mentioned above, the Western world’s reaction to COVID-19.

Currently, risk exposures for businesses can follow the same exponential growth path as a result of many factors; rapid business growth, changing and challenging regulatory environments, unstable economic circumstances, and population growth. As with the COVID-19 pandemic, risk exposures for businesses are here and cannot be eliminated completely but what can be done is reduce the impact it has on outcomes. How? Do what the countries did in the East with the COVID-19 outbreak:

–       React and identify the risk with intention and pro-action, this can result in improved decision making, planning and prioritisation.

–       Assess the likelihood of the risk materialising by anticipating what may go wrong and what the consequences would be, this helps to understand how to respond to business threats.

–       Mitigate the exposure to the risk by putting systems in place and allocating resources effectively in order to deal with the consequences.

Some may see risk management as invasive and financially burdensome, but it is not. It is an opportunity to gain insight and prevent negative consequences that can have an interconnected impact on business objectives and stakeholders.

In line with Camargue’s M³ philosophy of managing, mitigating and migrating critical business risks, in addition to the insurance coverage provided, policyholders will have access to various risk management services. Please visit Camargue’s Risk Management Brochure here or contact us at camargue@camargueum.co.za to find out more.


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Insuranceopedia.(2018). Loss Control. (Accessed 30 March 2020). Available here

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Machanick,P. (2020). Reality of exponential growth of COVID-19 shows South Africa’s lockdown is right.(Accessed 30 March 2020). Available here

Mahtani, Sand Denyer, S. (2020). How the U.S. can defeat coronavirus: Heed Asia’s lessons from past epidemics. (Accessed 25 March 2020). Available here

Pueyo, T. (2020). Coronavirus: The Hammer and the Dance What the Next 18 Months Can Look Life, if Leaders Buy Us Time. (Accessed 25 March 2020). Available here

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