“Unimaginable.” “Unprecedented.” “No big deal.” The COVID-19 pandemic led to a roller coaster ride for the financial markets in 2020. The S&P 500 dropped into bear market territory for the first time in over a decade, and large parts of the bond market simply stopped trading. Fast forward to the end of July — the US economy had just finished its worst quarter in history, and yet the S&P 500 was up on the year!
As risk professionals, we need to consider what lessons we should be taking away from 2020 — whether we focus on the heavy losses of March or the recovery that followed. We also need to consider whether there are other, non-economic impacts that we should examine, such as the radical changes in many business models that the pandemic brought about.
This paper offers essential reading for US insurance CROs as they embark on another turbulent year in 2021.