I know – this blogpost is going to be slightly off topic, considering my usual topics of personal finance, sustainability and minimalism, but…
Being married to an M.D, Ph.D and being an M.Sc in Economics myself, no doubt these two worlds have been discussing with each other quite a bit during the last 3 weeks. Everything has been up for discussion, from face masks, hand washing, to hospital capacity, policy responses both in Denmark 🇩🇰 and abroad.
What is the optimal strategy in the face of Covid-19, for health care workers, citizens, policy makers, and societies at large?
I think 🤔 that is the question every one is grasping with at the moment, and in our little family a discussion about personal protection for health care workers (and the lack of) got joined together with the concepts of Risk Mitigation Strategies in the light of Operational Risk. Economics concepts meet health care choices 🤷♂️.
Within the concept of risk mitigation strategies there are usually 4 basic strategies that can be followed.
Avoidance – in general risks that have a high likelihood of severe negative impact should be avoided. The problem with Covid-19, is that as it has gone global it doesn’t really seem like it can be avoided. So even though health policy makers in a lot of countries in the beginning of the pandemic seemed to think that somehow their country wasn’t going to be affected this didn’t really turn out to be the case.
Acceptance – generally speaking, if the costs involved in mitigating the risks are so large that “the cure” becomes more expensive then the disease then perhaps a strategy is to just accept the risk. The risk here seems to be both the disease itself, with the number of deaths that would bring, as well as the risk of reaching the maximal capacity of the health care system with the added negative side effects this would bring in increased numbers of deaths. Looking (from the outside) at health care policy makers and politicians both in Denmark and abroad it it seems like there is some disagreement. Are we accepting the risk? Exactly what risk is it that we the public have to accept? Are we going for herd immunity or not? Are the costs involved in mitigation too large? It seems like there is some disagreement in a lot of countries between the health care authorities and the politicians, and ultimately I think this can be boiled down to the pursuit of different end goals. Health care officials looking to the health care system and policy makers looking to the society at large.
Transference – well in business respect, this concept is well defined; if there is a risk you don’t like, then try to shift that risk on to someone else. Put clauses in the contract shifting the risk burden on specific points. Usually these risks are low probability risks with potential high impacts. I think in the current Covid-19 situation a lot of confusion comes down to whether the low probability event/high impact actions can actually be identified. And even if they can, the concept of risk transfer is very unclear and even slightly morbid.
Limitation – Usually in a business context, this is normally also quite clear, identify and limit an unwanted risk and try to minimize and limit e.g. the financial consequences hereof. In the face of a pandemic, to me it seems like there is not really a unanimous understanding of exactly how to reduce the risks involved. This is why there are so many big and small guidelines being drawn up. Guidelines which differs depending on who makes them, and in which country they are made. Will I reduce my personal risk by wearing a mask? Should I drink hot fluids? Should I be taking hydroxychloroquine as a prophylaxis? How do we as individuals and society at large reduce the risk involved? And exactly what are the risks? Should we advise mask wearing or not? Well with limited evidence, guidelines and policies seems to be drawn up that more seems to serve the respective end goal, be that of the health care officials, politicians or individuals.
So in the end, faced with incredible “operational” risk as a killer virus is roaming the earth 🌍 on a pandemic scale, our usual risk mitigation responses are proving inadequate. Apparently the virus 🦠 could not be avoided, the associated risk cannot really be transferred, there seems to be disagreement on how to limit the risk both on individual level and at large, so ultimately it seems – somehow – that the risk just needs to be accepted.
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