Risk management: An uncontrolled Ebola outbreak in the Grand Duchy could infect between 12-24% of the country’s population and wipe out 10-35% of financial sector revenues, KPMG has said.
An unchecked outbreak of the Ebola virus in the Grand Duchy could infect up to one in four Luxembourg residents and wipe out up to a third of the financial sector’s turnover, a consulting firm has warned.
KPMG said it applied “advanced risk modelling” to World Health Organization data to see what could happen if an Ebola carrier arrived at Findel airport. One model examined the impact on the finance industry, particularly the insurance sector, in the “worst-case scenario” that Luxembourg’s “government had few measures in place to combat the virus and that health infrastructure would not be adequate to deal with the outbreak,” the company said in a press announcement on Thursday.
Under that hypothetical scenario “the virus would spread to 12% of the Luxembourg population in one year meaning a total of 60,000 people would be infected.” KPMG projected that “would double if the virus developed an airborne mutation, which would therefore spread more rapidly.”
“The findings showed that the [financial services] sector’s overall turnover could collapse by anywhere between 10% and 14% and--in the case of an airborne mutation--could drop in the range of 25-35% due to higher mortality in this case,” according to the consulting firm.
In KPMG’s view: “The models currently used to calculate risk in Europe, as laid down in financial regulation, do not capture the risk of Ebola, other diseases nor a wide range of other risks such as fraud.”
Sven Mühlenbrock of the firm’s financial risk management practice argued that even when insurers fully comply with all EU and international regulations, “current risk checks fail to capture a number of important threats or assess their potential impact and this could prove dangerous.”
KPMG’s Ebola simulation “raises questions about whether current risk models fully address reality”, he concluded.
The current Ebola epidemic has infected at least 14,098 people resulting in at least 5,160 deaths, mainly in three west African nations, according US government figures updated on Wednesday.