Seamless interconnections: The fragility of interdependence

As a society, we are obviously becoming increasingly more interconnected. Most of the time, we don’t realize the fragility caused by our interdependence on our panoply of linkages and networks. We take our interconnections among and between people, physical artifacts, and digital artifacts as easily for granted (and as benign) as the sun rising in the East and setting in the West.

Until COVID-19 emerged in late 2019, all of our discussion about interconnectedness was framed almost entirely on social networks, networks more generally, and, of course, network effects (i.e. the ‘Big Tech’ companies – which we voluntarily use – that are ruining (or is that running?) our lives and ruining society).

COVID-19 is cutting society’s interconnections

The emergent properties of our global 21st century society have been primarily digital related: cyber-risks; social media enabling bullying, spreading misinformation, and amplifying outrage; and ‘trial by Twitter.’

But a global pathogen has supplanted our discussion about emergent digital issues. With COVID-19 cascading through country after country, the world is going into quarantine as we experience:

• entire countries being locked down
• major sections of countries being shut down
• conferences around the world being cancelled or moved to a virtual format
• colleges asking their students to leave campus and attend classes virtually
• businesses asking their employees to virtually work from home
• shopping malls being abandoned
• sports games being played without fans
• ‘social distancing’ (not shaking hands and staying at least 6 feet away from another person) and vigorous hand-washing being strongly recommended practices
• in some locales panic buying stripping grocery stores bare of items needed for hand cleaning, sanitizing, and bathrooms.

All of the above are natural human reactions to a pathogen infecting hundreds of thousands and killing thousands of people, that to-date does not have a vaccine or a course of treatment.

Moreover, all of the above, other than the guidance relating to hygiene, are drastically slowing or stopping commerce around the world.

Per an article in Fortune.com dated March 11, 2020:

I’m not arguing that the measures being taken should not be taken. I am glad that all of the actions are being taken. That doesn’t alter the fact that commerce, or the pace of commerce, is coming to a grinding halt.

(Personally, I believe that every US State and international communities should cancel their entire schedule of events for the Spring and Summer including fairs, festivals, music events, theaters, outdoor plays, college commencements, and other social gatherings until a vaccine or course of treatment for COVID-19 is identified and made available to everyone.)

Hoisted on our own petard (of interconnections)

As a society, we are currently being hoisted on our own petard: a natural phenomenon is driving us to cut, or at a minimum put, our global and regional (and local) interconnections on the shelf. COVID-19 may not be taking society back to the Middle Ages but it seems as if it is taking society back to a time before any significant amount of global trade was conducted through systems of either linkages or networks.

Society can not become completely digital

I realize there are probably quite a few people who see COVID-19 as an opportunity for society to become entirely, or at least, mostly digital. We may be forced to strive to make that happen until we have a vaccine or course of treatment for this pathogen.

However, a significant component of society is, and will always remain, analogue. Physical artifacts are not going to disappear. I believe that significant parts of our society can become even more dependent on digital interactions (what I label ‘Mediasphere’ in the visual below). But the practical reality is that people need, at a minimum, to have:

• food to eat and utensils (and plateware) to eat the food
• water to drink and containers to drink the water
• clothing
• medicine (over-the-counter or prescription) and containers to store the medicine
• a choice of physical artifacts to sit on for their homes and offices
• a choice of vehicles to share / own / lease
• groceries and storage/carry-bags for the groceries
• appliances in their homes and offices (for any number of practical reasons)
• infrastructure to move:
  • food, water, medicine, and medical devices
  • physical artifacts
• trains, planes and trucks to move food, water, medicine, medical devices, and (other) physical artifacts from one terrestrial point to another terrestrial point.

COVID-19 or not, our society is, and will remain, a mixture of physical and digital artifacts.

Societal interconnections: linkages & networks

Humans have been building linkages and networks to support its interactions with each other throughout the history of our species on our planet. We are an animal that communicates in a wide variety of ways including speech, art, trade, and an ever-expansive set of tools. From the Cave Walls of Lascaux to the walls of Facebook, from the Silk Road to ocean maritime shipping, and from party-line telephones to ubiquitous, mobile IP-connected telephony, humans have continually created and expanded communication pathways to share, shop, and entertain.

Three major domains of society’s linkages and networks

In the visual below, I attempt to capture three major domains of society’s linkages and networks and some of the key elements in the two historic domains of geographic territories and marketplaces:

• Geographic Territory: A small village or a town, city, state, province, or entire country. the territory consists almost entirely of physical artifacts but is increasingly leavened with digital capabilities (i.e. IoT).
• Marketplace: Where people and businesses go to shop and purchase goods (including food, water, and medicine) and services (including healthcare). Throughout most of our existence, the marketplace has been entirely comprised of physical artifacts. However, as society has become more computerized, more digital, more mobile, and of course interconnected using the Internet and web, the marketplace is increasingly a locus of both physical and digital artifacts.
• Mediasphere: My made-up term to mean a digital arena that supports communication, commerce, entertainment, virtual office work, news, and other digital services (i.e. virtual reality, augmented reality, holograms). The Mediasphere consists entirely of digital artifacts. (Other than remembering the reality that the infrastructure that enables the very existence of the Internet – and the web – is itself a portfolio of physical artifacts.)

COVID-19, an emergent property of our 21st century society as Dr. Hatchett stated, impacts all three domains. As I noted above, the pathogen is effectively slowing down or closing the interactions between and among people and physical artifacts within geographic territories and the marketplace.

Simultaneously, COVID-19 is transforming the Mediasphere into a crucially important domain for humans to interact digitally whether for business, education, news, entertainment, or other digital services. As some articles in the press have noted: COVID-19 will really test the limits of the digital ‘haves’ and ‘have-nots.’ This pathogen may be the trigger that finally motivates governments to ensure their entire populations can access the web and do so in a cost-effective manner (for consumers).

Implications and advice for insurers

During the COVID-19 crisis, insurers should:

• ask all of their employees, whether now working in the home office, a field office, or an agency to work from home
• provide the necessary equipment, and requisite security and privacy, for their employees to work from home
• hold meetings virtually
• strengthen the security of all of the company’s digital connections (including data flows within the company’s value chains and flows to/from external sources)
• ensure that their employees have the necessary telecommunications access to the content (forms, documents, files, presentations, other) they need to perform their work at home, including uploading the work from each employee
• ensure their employees can be tested for the COVID-19 virus from home.

For sales, claim service, and customer administrative service, insurers should also create the infrastructure, processes, and access to the requisite content for interactions with clients and claimants to be done virtually. Insurers who are using video solutions to fulfill these interactions will create more satisfied clients and claimants.

Prepare for post-COVID-19 times

Insurers need to be ready for the time the current global pathogen is contained (by vaccine or course of treatment) by:

• maintaining constant awareness of what events, even events that seem outlandish, could shred the firm’s interconnections
• considering the if it is possible to (profitably) offer new insurance covers to mitigate the risk of pathogens (even thought they are very low frequency and very high severity events) beyond business interruption or cancellation insurance
• creating analytical templates of “Density of Risk” territory profiles which illustrate the distribution of client ages and the distribution of client’s chronic conditions and diseases in each territory where the firm has insurance clients

What else would you suggest for insurers to do both during this current pathogen crisis and for the time after COVID-19 is resolved?