Over the course of the pandemic, ORX, experts in operational risk management and fraud, have been analysing how businesses, mainly financial services and banks have been impacted by Covid-19, including the high rise in social engineering crimes. These businesses are not just suffering through economical loss in late payments and insurance claims but reputationally through public scrutiny.
Dr Luke Carrivick is Head of Research and Information at ORX and specialises in operational risk data. He analyses how the current pandemic is affecting many financial businesses and banks around the world and the measures that need to be in place to operate with data safely in this unusual environment.
“When the costs of coronavirus for business and society as a whole are finally counted, they are almost certain to run in to the trillions. In our regular conversations with over 100 banks and insurers from around the globe, we see how the financial services industry has been acutely impacted. From stretching the resilience of global supply chains, to seeing cyber criminals exploiting public fears around the pandemic in fraud campaigns, the investment to manage the fallout of coronavirus has been significant. This inevitably has a knock-on effect on all business and society as a whole.
Perhaps the biggest potential cost of all to businesses, though, is reputational. That’s why we’re seeing banks and insurers making real efforts to support customers in the face of an impending downturn and facilitate government financial support schemes. In the face of considerable public scrutiny, failure to ‘do the right thing’ could be extremely costly for businesses, particularly for the financial services industry which has had its fair share of public scandal.
However, although coronavirus had the potential to cause financial apocalypse, this appears to have been avoided. Businesses have had to rapidly respond in the face of unprecedented financial and operational stresses, but efforts to ‘keep the lights on’ and the world moving appear to have been largely successful so far. In key financial services, for example, we’re seeing that payments are still working, and insurance claims are being paid.
In terms of normality, though, very few institutions that we have spoken expect a return to the world as it was pre-pandemic. There’s even frequent mention in our discussions with risk professionals of ‘BC’ (before coronavirus) and ‘AC’ (after coronavirus), proving just how fundamental a change this is.
Instead of a return to established ways of doing things, we see the emergence of a new norm, and it’s not all doom and gloom. Some of the significant costs that have been incurred will of course be written off, but some will have created new efficiencies such as investment in digitalisation and in virtual working. Whilst we may be entering an economically tough time, we may well see those businesses who have rapidly transitioned to the new normal, and who come off well reputationally, thrive in the new post-coronavirus world.”
