Lehman Brothers and Fruit Bats: What the 2008 Financial Crisis Can Teach Us About Epidemic Preparedness

Few catastrophes have more serious consequences than financial crises and epidemics. The 2008 financial crisis caused an estimated GDP loss of 5.5% across the developed world, while the 2014 West Africa Ebola epidemic killed over 10,000 people and reduced GDP in the three worst-hit countries by up to 21%. Financial crises and epidemics both start small, with the collapse of a single firm like Lehman Brothers or a bite from an infected fruit bat. But such events can quickly spread, sometimes reaching a global scale and costing billions of dollars. And worryingly, the risk of these crises may be growing – with more chances to spark and spread through increasingly connected economies and societies. Over the long term, another major financial crisis or epidemic is certain to occur, but our ability to predict or prevent the next crisis is limited. We do not know what will cause the next crisis, but we can reduce its impact through preparedness and response efforts, such as those implemented in the wake of the 2008 financial crisis and the 2014 West Africa Ebola epidemic. Although the financial crisis and the Ebola epidemic are two very different events, there are surprising similarities, and the financial crisis offers important insights into how to respond to public health crises. During the 2008 financial crisis, early, but delayed, injection of emergency capital from programs such as the Troubled Asset Relief Program (TARP) helped to mitigate the crisis. Through TARP, the US Treasury dispersed over $400M to buy toxic assets from large financial institutions to cleanse their balance sheets, encourage the resumption of lending, and stop the devaluation of otherwise healthy assets. This helped restore confidence by reassuring markets that all parties could pay their short-term debts, and firms would not fail unexpectedly. Equally important, much of this activity was globally coordinated across a number of institutions. To mitigate future financial crises, many central banks now have permanent lending facilities open to any bank that wishes to borrow in times of stress. The financial crisis also underscored the need for large financial institutions to develop better contingency plans and stress tests to identify and mitigate hidden risks in companies’ balance sheets. During the beginning of the financial crisis, many large financial institutions did not have sufficient plans to quickly respond to shocks in the financial system. Also, before 2007, most stress tests were performed by banks themselves. Now dozens of firms have plans and perform tests jointly with financial regulators, giving them a better chance of surviving a crisis. During the 2014 West Africa Ebola epidemic, the delayed injection of emergency capital and other resources slowed down efforts to mitigate the crisis. While the US and other countries ultimately allocated over $5 billion in emergency Ebola funding, resource-poor West African nations had greater difficulty raising funds. To mitigate future epidemics, several partners, including the World Bank, developed the Pandemic Emergency Financing Facility (PEF). PEF will provide funds and resources to health authorities early in an epidemic, enabling a rapid response that can help to contain the outbreak before it spreads. The Ebola epidemic put a fine point on why it’s critical to improve and stress test contingency plans for outbreak response. Standard public health protocols, such as isolating and providing clinical care to the sick and ensuring safe burials, ultimately contained the epidemic. However, the necessary protocols and facilities were not in place at the beginning of the epidemic. This was an even bigger problem because working relationships within the health system had not been systematically and rigorously stress tested. Due to the lack of facilities and preparation, decision-makers faced many challenges that slowed their reaction as they fought to develop plans during the heat of the crisis. In comparing the two types of crises, both share three important common lessons for preparedness and response. First, situational awareness is essential for early detection of a crisis and prompt intervention including the injection of emergency capital. Second, timely crisis response requires contingency plans to be developed well in advance of the next crisis. Protocols developed in the midst of a crisis are, by definition, improvisational and untested, and can delay response. Third, stress tests and response planning require coordination between governmental agencies and many different partners whether through major financial institutions or hospitals. Despite these common threads, public health authorities suffer from a lack of data and tools that are available to their financial counterparts. For example, unlike sovereign credit ratings for financial fitness, there are no current, widely-adopted metrics to measure pandemic preparedness – although the World Bank and the Joint External Evaluation are making some progress. Public health is also at a disadvantage because data are fragmentary and incomplete; even the location of hospitals is unknown to public health officials in many countries. The lack of data results in decreased situational awareness and creates problems in constructing objective triggers (such as those found in financial instruments) that could de-politicize epidemic response plans. Finally, unlike financial regulators, public health officials cannot unobtrusively (or computationally) stress-test clinical protocols in practice. In contrast to some previous public health emergencies, the 2014 West Africa epidemic was relatively mild. An event similar to the 1918 ‘Spanish’ influenza pandemic, were it to occur today, could cause a global 12.6% GDP loss and kill over 100 million people. We should not wait for a worse event to occur to start thinking about how to prepare our response. Preparedness for an event that can become global is only as strong as the weakest link in the system. Learning from financial crises can improve our preparedness and mitigate the costs for the next epidemic.  

Epidemics Must Be Better Understood

Intelligent Insurer interview with Metabiota underscores the need for insurers and reinsurers to better understand epidemic risk. http://www.intelligentinsurer.com/news/epidemics-must-be-better-understood-13041

Venture Capital Trends in Insurtech

Metabiota’s CEO Bill Rossi talks about trends in the Insurtech industry and the role epidemic analytics can play for insurance companies, intermediaries and corporates in the future. Original article: https://www.pehub.com/vc-journal/venture-capital-trends-in-insurtech/

Lessons Learned from Hurricane Andrew

Insurance Journal recently published a timely blog post from Metabiota’s Head of Product, Simon Tuck, about vital lessons learned from past hurricanes. Original article: http://www.insurancejournal.com/magazines/features/2017/09/04/462873.htm

The Hajj: A Threat to Infectious Disease Prevention?

Outbreak News Today published Metabiota’s new blog post by Staff Epidemiologist, Jaclyn Guerraro, on the Hajj and infectious disease prevention. Original article: http://outbreaknewstoday.com/hajj-threat-infectious-disease-prevention-32628/

Munich Re & In-Q-Tel Select Metabiota to Gain Deeper Insights into Epidemic Risk and Global Preparedness for Infectious Diseases

Metabiota Launches First Commercial Risk Modeling Platform and Preparedness Index to Help Insurers Understand and Underwrite Epidemic Risk SAN FRANCISCO – August 22, 2017 – Today, Metabiota, the pioneer in epidemic risk modeling, announced that two market innovators, Munich Re, one of the world’s leading reinsurers and expert on global risk solutions and In-Q-Tel, Inc. (IQT), the strategic investor that accelerates the development of technologies to support the U.S. intelligence community, have signed strategic agreements with Metabiota. The news comes as Metabiota commercially launches the industry’s first ever platform for estimating epidemic preparedness and risk, including the frequency, severity, duration and cost of outbreaks. With a powerful combination of epidemic risk analytics, historical data, disease scenarios and insights from public health analysts and global epidemiologists, Metabiota’s platform is enabling the insurance industry to offer new epidemic insurance solutions by delivering capabilities that allow insurers to better understand and underwrite risk. Nearly 100 years since the deadliest pandemic in history afflicted one-third of the global population, the world is still vulnerable to health risks, as evidenced by recent outbreaks of Zika, Avian Influenza, Ebola and the resurgence of previously dormant viruses like Measles and Cholera. In addition to its impact on human health, infectious diseases inflict a tremendous economic toll on national infrastructures. The Zika virus alone could end up costing Latin America and the Caribbean up to $18 billion, according to a report from the United Nations.  Metabiota’s platform is helping governments and organizations to better understand the threats posed by future outbreaks, while providing them with the data and modeling tools needed to gauge the potential financial impact of a major health event. “We believe that when risk can be properly assessed and mitigated by insurance, the world will be more prepared and able to manage these events,” said Bill Rossi, CEO of Metabiota. “At the same time, we’re helping the insurance industry build new revenue streams at a time when their core business is under threat by new business models and technologies. Metabiota’s use of big data and software to model epidemics is truly revolutionizing the insurance industry.” With an intuitive, cloud-based platform, Metabiota is providing risk managers and underwriters with unprecedented insight into how diseases propagate and help them quantify the risk posed by epidemics. The platform brings together a 100-year historical disease database with a unique catalog of more than 20 million risk scenarios describing the number of cases, deaths, hospitalizations, and employee absences to an epidemic event. “Metabiota’s analytics and intelligence help us to push the boundaries of insurability by protecting companies and local economies from the financial loss related to epidemics”, said Tom van den Brulle, Head of Innovation, Munich Re. “This really is the next frontier for the insurance industry – given the high risk of infectious disease outbreaks, it is imperative that we find new ways to manage and finance these risks for our customers.” “Infectious disease outbreaks present a growing security threat to the United States,” said Eugene Chiu, Partner, Investments, IQT. “Metabiota provides capabilities to better understand infectious disease risk via open source data fusion and sophisticated epidemic simulations.” Metabiota’s innovative approach to data includes a proprietary global preparedness index that measures national capacity to detect and respond to outbreaks. The Metabiota Preparedness Index empowers the insurance industry with more intelligence into how each country (and neighboring countries) are equipped to manage a health crisis, based on public health infrastructure, physical and communications infrastructure, bureaucratic and public management capacities, financial resources to underwrite disease response, and risk communication. The World Bank has referenced this Index as a possible way to better assess the future of risk. About Metabiota Metabiota is the pioneer in comprehensive risk analytics that help organizations and countries build resilience to epidemics and protect global public health. Built on a strong foundation of scientific expertise, including a worldwide network of on-the-ground experts, Metabiota delivers actionable, data-driven analytics to help countries and corporations mitigate complex health issues. With a strategic global presence and sustained partnerships, Metabiota’s agile approach helps identify, analyze and transfer the risk associated with biological threats. The company’s international footprint includes operations in nearly 20 countries and offices in San Francisco, Canada, Sierra Leone, Cameroon and the Democratic Republic of the Congo. For more information, visit http://www.metabiota.com. # # # MEDIA CONTACT: Aimee Eichelberger press@metabiota.com

The 7 Common Pitfalls to Avoid When Building a New Category

Metabiota CEO Bill Rossi offers great advice in Small Biz Daily about the “7 Common Pitfalls to Avoid When Building a New Category”. With over 100,000 unique visitors per month, Small Biz Daily is a popular business trade site originally developed by three former Entrepreneur Magazine writers. The site is well regarded for its content on startups, entrepreneurship and world of small businesses. The blog is an engaging piece that features the common missteps that startups can make when marching down their commercialization path. Bill includes such salient topics as "Going for the sharks…and ignoring the minnows," "Focusing too much on your competitors" and "Building a large sales force". ### View original article: http://www.smallbizdaily.com/building-new-category/

Data-Crunching Technology Spurs Insurance Dollars

Wall Street Journal’s VC Pro subscription news service published an important article today on the intersection between data technologies and the insurance industry. Entitled, “Data-Crunching Technology Spurs Insurance Dollars, A race to predict and head off emerging threats through data analysis,” this piece discusses several novel companies specializing in artificial intelligence, machine learning and modeling that are developing products to help insurance organizations better manage and mine data. Metabiota’s groundbreaking technology for understanding and evaluating infectious disease risk from an insurance and reinsurance perspective is cited in the article. An excerpt from the article is as follows: “Insurers are also turning to startups for help understanding the risk of outbreaks of infectious diseases, such as Zika or Ebola. This helps them underwrite risk for countries and corporations seeking insurance policies that help them respond quickly to emerging disease threats. San Francisco-based Metabiota Inc., for example, is launching a platform for estimating epidemic preparedness and risk. Reinsurer Munich Re and In-Q-Tel, the strategic investor for the U.S. intelligence and defense communities, are using the platform to identify, quantify and mitigate infectious-disease risk.” ### View original article (paywall): https://www.wsj.com/articles/data-crunching-technology-spurs-insurance-dollars-1501068655

Is Your Company Prepared for a Pandemic?

In this new article co-written by Jim Toole, managing director at FTI Consulting Forensic & Litigation Consulting, and Metabiota Product Manager, Cristina Stefan, we learn that corporations have a number of important considerations to make when planning for, and mitigating the effects of, infectious disease events on their organizations. The piece lays out what is at stake for any corporate leader performing business continuity planning or enterprise resource management. Read here: http://ftijournal.com/article/Is-Your-Company-Prepared-for-a-Pandemic

Five Ways Big Data is Transforming Epidemics

InformationWeek.com has published new blogpost by Metabiota’s Senior Director of Data Science, Nita Madhav, about the critical ways in which Big Data is transforming epidemic mapping, modeling and preparedness for infectious disease events. Original article: http://www.informationweek.com/big-data/big-data-analytics/five-ways-big-data-is-transforming-epidemics/a/d-id/1329072