Coronavirus and Risk Management

Coronavirus and Risk Management

by Doyle Ranstrom on Mar 8, 2020

In the financial planning business, we often talk about risk management.  When our children were young and dependent on us, my wife and I each owned a term life insurance policy.  Obviously, we did not want to or plan to die, but there is risk in the world, and if either of us did die, we wanted to pay off debt and replace lost earnings so the surviving spouse could maintain the family's lifestyle.  

I also owned a high-quality disability insurance policy.  I certainly did not want to become disabled, but as the primary source of family income, it was prudent I insured part of my earnings if I was disabled.  

Both of the above are called long term planning and risk management.  

Businesses do this and so should the federal government.  The reality is many of the experienced and full-time professionals in various government branches are able to do risk management and long-term planning.  However, they are limited and only as good as the Executive Branch and political appointees enable them to do so.  

The following are examples of not understanding risk management and an inability to do long term planning.

Inspired by the H5N1 bird flu scare in 2005, the Bush Administration launched the Predict Project which expanded by the Obama Administration.  This was a surveillance program for potentially dangerous animal viruses that had the possibility of infecting people.  It was shut down by the current Administration.  Peter Daszak, president of the EcoHealth Alliance, a nonprofit global health organization that received funding from the program said:  “Predict was an approach to heading off pandemics, instead of sitting there waiting for them to emerge and then mobilizing." The program had a cost of about $207 million and had been responsible for identifying over 1,000 viruses. Ending this program is a perfect example of not understanding either risk management or long term planning".

In May 2018, the top White House official, Rear Admiral Timothy Ziemer, left the administration. He was the senior director of global health and biodefense on the National Security Council and oversaw global health security issues. His team also left and was not replaced.  In part, this team was responsible for coordinating the U.S. response to pandemic outbreaks across agencies.  This is equivalent to an individual having a high risk of multiple deceases and then firing the coordinating physician.  

Though it was restored by Congress, the current Administration proposed cutting the CDC in the two previous budgets and in the recently proposed one.  So let's see.  We know we are at risk of global infectious deceases, so the Administration proposes cutting the budget for our best defense against them.  This would be the equivalent of reducing one's life insurance coverage to save some premium money right after finding one has a lethal decease.  

In November 2019, the Center for Strategic International Studies [CSIS]  issued a report entitled "Ending the Cycle of Crisis and Complacency in US Global Health Security.  This is a non-partisan report, and if you are interested you can find and read the entire report online.  The following is the Executive Summary. 

  1. Restore health security leadership at the White House Security Council. 
  2. Commit to full and sustained multi-year funding for the Global Health Security Agenda to build partner capacity.  
  3. Establish a Pandemic Preparedness Challenge at the World Bank to incentivize countries to invest in their own preparedness.
  4. Ensure rapid access to resources for health emergencies.
  5. Establish a US Global Health Crises Response Corps.
  6. Strengthen the delivery of critical health services in disordered settings.
  7. Systematically confront two urgent technology challenges:  The need for new vaccines and therapeutics and the public health communication crisis.  

At this point, I thought about making a joke, but this is serious stuff and requires adults in the room. The coronavirus was going to happen.  But the Administration's along with parts of Congress's inability to think in terms of risk management and long-term planning is extremely scary.  It is clear to me this Administration has put myself, my family's and everyone else's long-term health in jeopardy.  

Finally, as an independent moderate, I realize the need for politicians to be politicians and their supporters to be supporters, however, everyone has to understand, health does not care about politics, but politicians need to care and understand health care.  They also need to understand it is a risk management and long term planning issue.