RIMS Australasia 2020 Virtual Summit: DAY THREE: 3. Phronesis: the art of the possible

Aristotle defined phronesis as “practical wisdom” or “the art of the possible” and its possession of this mindset that will enable companies to emerge stronger from this intensely disruptive pandemic period, according to Stephen Higginson,  Head Customer & Distribution Mgmt ANZ, Swiss Re Corporate Solutions.

Things have changed for everyone in 2020. “But whenever there is a period of intense disruption it is inevitable the the opportunities outweigh the challenges,” says Jason Betts,  Partner, Herbert Smith Freehills, speaking alongside Higginson at RIMS Australia 2020 Virtual Summit. 

Perhaps the most significant change is the sudden growth in white collar homeworking.

This has brought with it many new risks, from an increase in the potential for fraud and cyber loss, to difficulties overseeing the cultural changes that many firms aspire towards in order to prepare for the post-pandemic world.

“At the moment implementing change and assessing success is a crap shoot,” says Betts. 

The pandemic has also brought with it a major shift to online shopping. “In some areas there has been a 95% growth when compared to last year,” says Betts. 

But can your infrastructure cope? The risk of fraud, scams and identity theft has always been with us, but now it is particularly intense. While the firms that help us negotiate the online world – Facebook, Google and Amazon – are now undisputedly some of the most powerful companies in the world and repositories of consolidated risk.  

In addition, the pandemic has brought with it a heightened risk of class actions over the way Covid-19 has been managed – or mismanaged – with cruise firms and care homes already subject of major cases, and the regulatory environment is changing fast to accommodate the “new normal”.

“I can’t emphasise enough how impactful all this will be,” says Higginson. “How will the economy adjust?”

The answer, he says, is phronesis, and through practical wisdom we will succeed.

This means undertaking a full contract review of all your material contracts, reviewing and updating your customer service policies, making sure that you have an appropriate cyber security plan, monitoring how you expect the business to move forward and if necessary revising any forward-looking statements – after all, the future is no longer clear. 

“The reopening of your business will need to be planned very carefully,” says Betts. 

For example, how does homeworking affect health and safety? 

And possibly most important of all: undertake a very careful internal risk analysis and a full assessment of your regulatory requirements. “If you thought the regulatory environment was complex before the pandemic, it’s going to get much more granular as we move into a virtual environment,” says Betts. 

And you need to spend money, now: “investment could be what makes the difference between challenge and opportunity.”