Before writing this article, I would like to extent my sympathies to all those that have been affected by this virus.
I too have elderly relatives I am worried about, and hope for the situation to be resolved as soon as possible.
I read a scary statistic today. The increase in the number of people dying from suicide is much higher than normal.
Thus far the number of people dying from suicide is higher than the virus itself, which shows that the way we deal with this is key.
The short-term damage economically from the virus could be bigger than the virus itself, if people panic.
So I hope this article will be reassuring to readers about the markets and will end with some optimism about what the crisis has taught us about risk.
Speaking about risk, during 2008-2009, one of my favourite books during the economic crisis, was from Nassim Taleb.
In his book the Black Swan, he speaks about the damage that highly unlikely events can do to the world.
Statistically speaking, virus’ usually aren’t bad for markets. In fact, stock markets have usually gone up on virus’ in countless past outbreaks.
However, on this occasion, rightly or wrongly governments have reacted by mainly closing down large sections of the face-to-face economy.
What is clear is that many businesses didn’t plan for this possible “black swan” event caused by an outbreak or terrorist attack.
So whilst online businesses such as Netflix, online schools and other digital operators are seeing increases in demand, many other businesses are struggling.
I have personally been working from home for four years now, as I find it more efficient.
When I came into the finance industry, I was amazed at all the wasted time both companies and clients went through.
Two or three face-to-face meetings, commuting and other time consuming activities.
Added to that, many advisory firms only focused on one country, and then panicked after natural disasters (Japan in 2011) or political upheavals (Tunisian and Egypt in 2011 or Venezuela recently).
Just like today, most wait until the problem hits, rather than planning just in case.
Therefore, when I started my own business, I wanted to do things differently as I explain here.
By having a remote and global model, we don’t need to focus on one country, and our costs are super low.
Therefore, if one country or region goes into crisis, we are well protected.
We have seen demand increase in the last few weeks, and continue to grow quickly, as people want to deal more with online providers during these periods, from a risk point of view.
Not everybody can work remotely – most teachers, doctors and manual workers cannot.
However, once people are back to work, and markets recover, I hope more businesses think more carefully about risk as these unexpected events do occur every few decades.