Singapore has begun the perilous journey of opening up its economy. But greater economic freedom will heighten risks

Singapore became the envy of the APAC region in August as it announced it had vaccinated 80% of its entire population against Covid-19. The milestone followed a largely successful Covid-strategy to date, with a world-class contact tracing apparatus able to stay on top of virus outbreaks in the city. It has only recorded 58 deaths so far, as of September 16.

The nation of 5.7 million people has implemented a technology-based contact tracing system, with its TraceTogether app viewed as one of the successful tools used by global governments. The app has helped the country avoid costly lockdowns, although Singapore has retained tight controls on mass gatherings since the crisis hit.

Singapore’s Prime Minister Lee Hsien Loong said the vaccine landmark would mark a shift from the prior elimination strategy, stating the nation would need to “change gears” and learn to live with the virus.

A phased reopening

Singapore’s grand reopening will be a phased process. Social distancing and restrictions on the unvaccinated will stay while tight border controls will remain, at the beginning of the plan.

A “preparatory stage will see entry requirements eased for vaccinated visa holders and their families, while people arriving from low-risk nations will be able to quarantine at home with regular testing. Half of workers returned to the office in mid September.

The country has also begun to open up “vaccinated travel lanes”, allowing passengers from overseas to enter as long as they provide a negative PCR test on arrival. Germany and Brunei were the first nations to be included in the scheme, while Travel Passes have been issued to some travellers from Hong Kong and Macau.

As Singapore becomes a trailblazer for nations pivoting from a Covid elimination strategy, businesses in the city state will face a series of challenges navigating the reopening, according to risk management experts at Willis Towers Watson.

David Hill, a regional director, risk & analytics for Southeast Asia at Willis Towers Watson, says organisations will be taking a step into the unknown.

“The biggest uncertainty facing corporations as governments cautiously move on from Covid-19 avoidance to Covid-19 management may be due to the lack of evidence-based analysis,” Hill said. “It is not yet proven if target resilience levels are achievable and hence not known whether there will be a repeating cycle of national lock-downs and changing travel restrictions.

“Adding to the uncertainty, however successful Singapore is, there is still vulnerability within supply chains elsewhere in the region and globally,” he adds.

Duty of care

Business resilience measures will be critical as organisations deal with Delta entering the community. “Where possible, companies in Singapore are adopting very practical physical measures to increase resilience,” Hill says.

While practical physical measures will suffice in some industries, the hospitality sector will struggle to operate with strict guidelines.

“Construction companies are enforcing complete segregation between discrete work areas with the intent that any identified Covid-19 positive cases will be confined and managed with a partial shut-down of the project, instead of a complete closure. It is an unwelcome compromise to flexibility, but it’s an expedient short-term mitigation. It also has limited application in the service sector.”

Indirect exposures in workplaces will continue to affect attendance and business operations, Hill said. And while Singapore may be taking steps towards a semblance of normality, global supply chain issues will continue to disrupt businesses in the city.

“Most companies have been affected to some extent by component or material shortages whether it is industry-specific, such as the global chip shortage, or in general, including the national lockdowns or port closures. Very often, the response to one exposure can introduce consequential downsides elsewhere,” Hill adds.

What risk management considerations can businesses take as governments pivot from Covid elimination strategies?

According to Hill, insurance considerations can be vital in safeguarding businesses.

With delays in shipment and inventory back up, companies will need to be vigilant on stock issues and credit management, Hill says.

“Good trade credit insurance can help secure financing for increased inventory, providing outsourced credit management and debt collection services for optimised recoveries. This is an important time for businesses to evaluate the adequacy of their trade credit insurance, whether or not they have purchased it in the past, and check the adequacy of limits and coverage,” he says.

From just-in-time to just-in-case

Meanwhile, port delays, reduced vessel capacity and fewer flights mean more stock is being held in transit. The higher volume of stock sitting around means companies need to be more proactive with their property insurance.

“These increased values represent a greater physical exposure that requires property insurance declarations, loss estimations and policy limits to be revisited,” Hill says. “Similarly, for marine cargo insurance, stock accumulations will need to be monitored against any-one-location policy limits.”

Willis Towers Watson also notes the increased threat of D&O litigation in a post-Covid environment. Amid greater financial stress, there is a heightened risk of investor suits against the directors and officers of companies.

“It is therefore important to acknowledge that underwriters’ appetite is tightening to exclude insolvency-related claims,” he says. “It is absolutely critical that boards are kept apprised of changing exposures and controls are in place so that they can make informed, rational and hence defensible decisions.”

No jab, no job?

Across APAC, businesses will face the dilemma of whether to impose mandatory vaccine mandates on their workers. Employers will want to reduce health risks in the workforce but could come under legal pressure as they attempt to enforce “no jab, no job” policies.

“It is also necessary to be vigilant of the downside emerging risks with vaccine strategies,” Hill says. “Segregation of work duties based on vaccine status and implied coercion of employees to accept vaccines will be viewed differently from country to country. This could lead to more pressure at board level in some territories, including employees filing suits for alleged employment practices infringements.”

Organisations in Singapore face a challenging year ahead as the nation manages its transition from Covid elimination.

“The Covid-19 situation will continue to be a dynamic one with no certainty of the timeline,” Hill adds. “In the Singapore context, clarity of the four-stage reopening, with each step being defined, will help to support local decisions as the country embarks on its plan to be a Covid-resilient nation.”

Singapore will offer an instructive test case for the other “elimination” nations in APAC. As the island state embarks on an unprecedented journey, the only thing to be certain of in the months to come is more uncertainty and risk.