How Covid-19 revealed under-appreciated risks
“Only when the tide goes out do you discover who’s been swimming naked,” legendary investor Warren Buffett once said.
While few portfolio managers anticipated the sheer speed and force with which the waters receded during Covid-19 – or the swiftness of their return, the impact of the pandemic made clear that potential risks exist that may not have been seriously appreciated before.
Read also Covid-19 Is Most Certainly A Retirement Story
The coronavirus crisis sparked a “huge realisation of how risks in a systemic risk event cascade in unexpected directions”, said Sandy Kaul, New York-based global head of business advisory services at Citi, speaking at the launch of the Official Monetary and Financial Institutions Forum’s (Omfif) Global Public Pensions 2020 report in November.
Read also Fraudsters prey on the fears of China’s aging population.
As a result, she added, “decomposing something like climate change into a geographic risks or sector risk doesn’t really work because you don’t know what other sectors are going to start to be impacted as part of the cascade”.
Read also South Africa. The battle for pension savings: Between secure retirement and survival
The crash also served as a timely reminder that liquidity is never there when you need it most – as an ever-swelling wall of money continues to pour into illiquid assets.
Read more @Asian Investor
345 views
