The Edge of Risk Menu Search
New thinking on corporate risk and resilience in the global economy.

Quick Takes

Australia’s Fires May Cause Record-Setting Damage to Its Economy

Source: Fire Information for Resource Management System, NASA

A NASA project using satellite imagery shows “near real-time active fire data.” This image captures active fires between December 5, 2019, and January 5, 2020: Each pixel represents 1 kilometer, and contains at least one active fire. 

While some sources estimate the damage to be around $280 million, the Insurance Council of Australia estimates “damage claims from the fires to [be] more than AU$700 million [$480 million], with claims expected to jump when more fire-hit areas are accessible,” according to Reuters, which adds that “insurers have received 8,985 bushfire-related claims since November 8.” 

The economic damage on Australia’s eastern seaboard is “likely to exceed the record $4.4 billion set by 2009’s Black Saturday blazes,” according to economist Katrina Ell in The Guardian. Air pollution and “direct harm to industries such as farming and tourism,” will significantly damage the economy, the article cites, with “tourism bodies say[ing] it will cost hundreds of millions of dollars to rebuild.”

Global Food Prices Rise, Impacting Food Security

Source: Food and Agriculture Organization (FAO)

Global food prices rose for the ninth consecutive month in February, reaching their highest level since July 2014. Food prices increased by 26.5%, compared to the same time just last year. Pandemic-related disruptions to the food and agriculture industry — such as restrictions to global trading and economic distress — contributed to the lower supply of certain foods.  

The FAO Food Price Index — which tracks changes in global food prices — found the biggest increase in the price of sugar — which is up 6.4%, “as production declines in key producing countries together with strong import demand from Asia prompted ongoing concerns over tighter global supplies.” Vegetable oil prices saw the second-highest hike in prices with a 6.2% increase, reflecting concerns about low production, inventory and export potential. 

Food insecurity was growing prior to the pandemic, and estimates show that the virus could almost double the number of people experiencing hunger. International partners and governments are working together to monitor food supply chains and provide financial support for those who are unemployed and are unable to buy food.

Low-Income Households Rank Remote Learning Less Effective Than Other Income Groups

Source: World Economic Forum

By mid-April 2020, 94% of students worldwide were affected by COVID-19. In two surveys of more than 100 countries, online learning platforms were scored 58% fairly effective and 36% very effective. But lower-income households share a different experience: This group is more likely to express that remote learning has not been effective during the COVID-19 pandemic. 

The pandemic has prompted educators and students to adapt to new learning methods and technology. But low-income households are less likely to have access to technologies that allow for a sufficient adaptation to remote learning. In response, some education companies are creating learning content that can be accessed on SD cards and 2G and 3G networks. One company distributes donated smart devices for free to children with limited or no access to online education. 

Since reopening, some schools have adopted a hybrid approach to learning — a trend that may continue after the pandemic, as investments in some education technology companies reached into the billions in 2020. 

How Can Leaders Maintain Employee Engagement in the Virtual Workforce?

Source: Marsh and McLennan

COVID-19 has shown that 44% of workers are able to work remotely. But companies with remote workforces risk losing employee engagement in terms of “productivity declines, behavioral lapses and lower retention rates,” according to a report by Marsh McLennan Advantage. Interviews conducted with 50 senior executives across industries globally uncover four key imperatives for engaging employees in the new normal. 

The first step is for leaders to listen to employees’ feedback and follow up with clear action plans. The second step is to communicate with employee-focused messages. When leaders understand the diverse workforce, they can speak authentically to employees’ needs and values. The third imperative is using technology that enhances the impacts of virtual communication, while also considering the security risks associated with technology. Finally, impactful employee communication requires the CEO, HR leaders and communication leaders to work together. The report notes that “bold measures designed to recharge employee engagement can deliver an energized, healthy, productive and committed workforce.”

How the Tourism Industry Is Adapting to the COVID Economy

Source: International Monetary Fund (IMF)

International tourism dropped by 70% during the first eight months of 2020. Tourism-dependent countries — especially in the Carribean, Latin America and the Asia-Pacific region — will face a longer recovery period. For example, in Aruba, tourism accounts for over 80% of GDP, according to the IMF.

Tourism-dependent countries entered the pandemic with limited ability to pivot to other streams of revenue. The IMF notes that diversifying exports could enhance the connection between tourism and other sectors in these countries. Some are even starting to promote domestic tourism and long-term stays. To help manage the financial stress of COVID-19, some governments have also provided training to reskill employees in the travel sector. 

Before COVID-19, tourism accounted for more than 10% of global GDP and created over 300 million jobs globally. Although COVID vaccines and travel bubbles can help jumpstart the tourism sector, the IMF states that, “diversifying, shifting to more sustainable tourism models and investing in new technologies could help to shape the recovery.”

BRINK’s daily newsletter offers new thinking on corporate risk and resilience. Subscribe