Risk Management for COVID-19

Photo by Loic Leray on Unsplash .

A global pandemic poses many challenges. It is entire societies, countries and even continents that have to cooperate to manage the aftermath. It turns out that COVID-19 has separated the sheep from the goat like no other threat in recent history. In the following I look at successful responses and what sets them apart. Then I’ll talk about how they fit into a bigger picture from the perspective of risk management.

I thank Oliver Mader for his review and feedback to an earlier version of this article.

Successful Responses

Several countries have responded successfully to the threat posed by COVID-19. I have looked at two of them:

  1. China: With a population of 1.4 billion people and in the big cities a huge population density it is certainly difficult to successfully control a pandemic. Still, they got out with less than 5,000 deaths. At least that’s the official count. It is quite possible that they missed a certain number of cases, but even if their body count was 10 times as high they’d still be doing marvelously well. After the initial wave in Spring 2020 there were a couple of more surges, but all of these have been contained quickly and efficiently and none of them has led to a larger outbreak since.

    China clearly and decisively failed at prevention, and they needed a massive lockdown of 60 million people to get things under control. Subsequently, they got by with merely local business and school closures, and they established data centrally managed by apps which involved ubiquitous tracking of mobility data and correlations.

  2. Taiwan: Taiwan has only 23 million inhabitants, but has a high population density in the big cities. They acted early and have excellent quarantine and control measures. They had only 7 deaths due to COVID-19 in 2020 and until March 2021 only 10 deaths altogether. While their tourism industry is heavily affected, they were free from bans on gatherings, school or business closures.

So while China took many actions that are authoritarian and are comparable to what Western states do to prevent terrorism (albeit entirely ineffectively), Taiwan is a democratic country with free speech and free elections that got by without drastic restrictions in public life.

Tomas Pueyo has a fabulous post on the commonalities of successful countries, he calls it the “Swiss Cheese Strategy”. One of the key findings is

Japan, Taiwan, China, Hong Kong, Singapore, South Korea, New Zealand, Australia, Mongolia, Thailand or Vietnam all followed different variants […], yet all have been successful.

They prove that any country can succeed.

The Key Steps to a Successful Response

Tomas wrote in his post there are different layers in a response to the COVID-19 threat. Each layer is imperfect and has holes in it, it is insufficient in isolation. Yet a combination of multiple, distinct layers can become an impenetrable defense. Since the post I believe an additional layer has become available, the inoculation of the population – altogether we end up with the following five layers of defense:

  1. Fence: Stop infections from coming in. Taiwan is very good at it by imposing and enforcing quarantines for everyone who enters the country. In addition, they mandate PCR tests on arrival and soon after.

  2. Limit Social Bubbles: For those infections that come in, minimize the number of people that meet. This means limiting the size of people gatherings. Depending on local prevalence this also means school and business closures, possibly even curfews. The latter are very expensive measures, so they shall typically be used only as a last resort.

  3. Minimize Contrafections: For those that meet, limit the likelihood of infections. This means wearing masks whenever possible and prefer to meet outdoors rather than indoors.

  4. Test-Trace-Isolate: For those that get infected, identify them quickly and stop the further spread of infections. Health care authorities can be effective at isolating infections and finding their contacts if the number of infections is not too high. Tomas recommends positivity rates of PCR tests below 3% and two or more contact tracers per daily case. He also recommends that contact tracers must focus on speed and on identifying super-spreader events. For this layer it is critical to have effective, mandatory and strictly enforced quarantines.

  5. Vaccination: Inoculate the population to limit the spread of untraced infections and to limit severity of COVID-19. Essentially all approved vaccines prevent severe cases of COVID-19 alleviating the stress on health-care facilities. Some may even prevent people from becoming infectious, which is key to destroying the threat of COVID-19 altogether.

In the two examples above we find:

  1. China has used every layer: they closed their borders and mandate 14-day quarantines for everybody who wants to enter the country; they had regional lock-downs on a rather large scale (plus a couple of smaller ones), they mandate masks and have effective test-trace-isolate programs. They are not yet relying on vaccinations, but they also don’t have to.

  2. Taiwan has used the first, third and fourth layer, but did not have to use the second layer at all. They are one of the most successful countries on the planet, yet they didn’t need to close schools or businesses or have to limit the size of gatherings. They haven’t started vaccinations, either.

The five layers are not equal. The fourth layer only works if the number of infections is not too high. Even Taiwan’s health authorities would be overwhelmed and unable to cope with thousands of new cases per day. On the other hand, layer two works regardless of the prevalence of infections — China had mandated curfews and shut down all business and social life in the Hubei region for three months and managed to eradicate COVID-19. This is, however, very costly since many businesses will be unable to recover, and a massive wave of bankruptcy is an almost certain outcome.

Layer five can only be used once a vaccine is available. Israel, the USA and U.K. have relied on layer five to a very large extend, neglecting other measures that might have been more effective at an earlier time. Still, if you rely on one thing only, those countries certainly did it right!

There is one commonality: the procurement strategies do not focus on an isolated action and a singular source, but a diverse portfolio of vaccines from different sources and concessions for getting priority access. That means the countries that were successful in procuring vaccines indeed followed a variant of the multi-layer strategy!

[…] the U.S. and the U.K. bought millions of doses of various vaccine candidates last summer, without knowing which ones would be effective.

The Value of Time

While the five layers are key to a successful response there is another factor that has had decisive impact: Time! China initially failed to respond to the warnings originating in Wuhan and when they finally responded they were cornered and had to institute a strong lockdown. Other countries reacted earlier and prevented such an expensive action.

Picture from Tainan/Taiwan In fact, for decades Taiwan has had annual reviews of their preparedness in case of a pandemic, see this report. The abstract of that paper concludes with “Taiwan’s preparedness plans are satisfactory, …“ with further details on what works well and what can be improved. When the time came they needed to act, they immediately knew what to do and how to do it. This is covered well in another post by Tomas Pueyo. While the first action was taken weeks before the first infection appeared in Taiwan, another batch of more than 100 measures were already in place before March 2020.

As the old adage says “an ounce of prevention is worth more than a pound of cure” the value of preparation is that it gave the successful ones a head-start over those countries. The others were unprepared and at best could copy what successful countries already had. Many countries even failed at that.

On Evaluating Risk

Some countries were excellently prepared for a pandemic, while others were totally caught by surprise. So it’s a good idea to hedge against all possible risks, isn’t it? So let’s build defenses against a flood everywhere (even in the Tibetan highland, because you never know), giant hamster traps in case we are attacked by space hamsters. Let’s build some multi-generational interstellar spaceships in case Earth is threatened by a black hole entering our solar system …

The issue is that preparing against all conceivable potential threats is expensive. Way too expensive. Yes, a black hole entering our solar system would be cataclysmic. Is there something we can meaningfully do now to avert the consequences of such an event? No, there is not. If it happens we’d have ample warning time (possibly thousands of years) to respond, so the value of time is negligible.

An attack of giant hamsters from outer space would also be disastrous. Is it likely that we can meaningfully prepare for such an event? It is very unlikely to happen and even if it did happen we’d have way too little information in advance to prepare any meaningful response.

Risk Responses

Some countries had responded to the pandemic but advance planning and already knew what to do. That was pretty cheap and gave them a huge head start and advantage. From a return-on-investment perspective that was indeed an excellent thing to do.

So is advance planning always the best strategy?

Let’s look at some possible responses for risks deemed sufficiently high:

  • Avoidance: Prevent the risk from occurring by appropriate planning.
  • Mitigate: Do not prevent, but reduce the impact of the risk.
  • Accept: Take the risk. This might be a deliberate choice (when speculating money) or in involuntary default (like ignoring the risk).
  • Escalate/Transfer: Transfer the risk to some other party or escalate it within the organization. This is not always possible, but an excellent choice when it is. An example of transferring risks would be to purchase an insurance against fire.

For the COVID-19 pandemic successful countries have focused on risk mitigation, whereas unsuccessful countries have (typically involuntarily) accepted the risk. Note that avoidance never was an option, neither was escalation nor transfer.

Risk Impact and Severity

Typically, risk is evaluated by a probability-impact assessment. In the simplest form it reads:

$$R = p \times I$$

where R is the “risk factor”, p is the likelihood of the risk and I is the potential impact the risk has. In the simplest form, p and I are integer numbers between 1 and 3:

1Unlikely, may happen less than once during lifetime of the system.
2Possible, may happen at least once during lifetime of the system.
3Very likely, may happen more than once during lifetime of the system.
1Low, impact and/or losses are limited and bearable.
2Moderate, may impact service.
3Severe, may cripple the system or cause unacceptable losses.

Thus, risks are described by numbers ranging from 1 to 9:

  • 1-3: Low risk, does not require counter-measures and may be accepted.
  • 4-6: Moderate risk, should be mitigated, but not necessarily avoided.
  • 7,8: High risk, shall be avoided or escalated/transferred.
  • 9: Severe risk, must be avoided or (if avoidance is impossible) must be escalated or transferred.

When applying this lesson to COVID-19 we must check how different organizations have viewed the likelihood and the potential impact of a global pandemic:

  • A study by the German Government has categorized a pandemic caused by a Coronavirus from the SARS family as the most likely disaster with an impact of up to ten million casualties. Thus, based on this paper the likelihood is 3 with an impact of 3, resulting in a severe risk scenario. Unfortunately, Germany has not prepared and is among the countries with high casualties and high costs.
  • A study by the WHO has looked at the impact of a respiratory pandemic with asymptomatic spreading and suggested possible actions for preparation. Based on this paper, I’d say the likelihood is 3, and the impact is 3, resulting in a severe risk. Again, some countries have taken it seriously and prepared well, limiting casualties and economic impact.

Another Example: Global Climate Change

There is an old, but still extremely insightful video about risk mitigation for man-made Global Climate Change (GCC). It has the very provocative name “The most terrifying video you’ll ever see”:

This video simplifies the risk assessment by looking at the avoidance vs acceptance strategy in case of a singular risk whose exact likelihood is unknown but whose impact is very large.

The key idea is the “rows-vs-columns” argument. It boils down to the following table:

Action takenRisk accepted
GCC is falseHigh cost, little valueAll is well
GCC is trueAll is wellCatastrophic

The key argument is that we are unable to choose the row of the table, it may even be difficult to quantify the risk. However, we are able to choose the column and thus the outcome in either scenario. The cell in the bottom right is definitely the worst possible outcome that must be avoided at all cost. The only way to avoid that outcome is to choose the first strategy (the “avoidance” action), independent of the actual probability of the two rows.

The moderately costly avoidance response is superior even if the risk is not fully quantified.

There are a couple of simplifications:

  1. The likelihood vs impact of the risk is not quantified. Typically, the likelihood of man-made climate change is considered to be above 95%, see e.g. Attribution of recent climate change and the impact is catastrophic, refer to Effects of climate change on humans. I.e., the risk is considerable. This simplification makes the key finding more prominent, even if those numbers turn out to be inaccurate or an over-estimate.
  2. Only the avoidance strategy vs the acceptance strategy is considered. Again, this makes the conclusion more prominent.
  3. The cost of the avoidance strategy is not exactly quantified, it is assumed to be significantly lower than the risk of the acceptance strategy.
  4. It is assumed that the avoidance strategy is effective and mitigation unnecessary.

Except the last point all previous simplifications make the conclusion more prominent and are valid. When deciding on specific actions, however, I believe that the last simplification is not sufficient. Whereas points 1-3 conclusively answer the question “should we take action?”, the last point 4 must be considered when addressing the follow-up question “what specific actions shall be taken?” At this point both avoidance and mitigation options must be considered — and it is also at this point where we should consider a multi-layer response as outlined above, aimed at both preventing specific consequences of climate change and mitigating their effects on people and societies.

Applying this lesson to COVID-19 is a bit harder since in that case an avoidance response was not possible, and the most successful responses involved several layers of mitigation. Furthermore, the cost of mitigation is mostly negligible compared to the consequences (with the only exception of layer two, school and business closures and bans on social gatherings).


Many countries have successfully responded to the challenges posed by COVID-19. They have used different responses, but all successful responses can be classified by a multi-layer approach. Time turned out to be a critical factor. In the bigger picture the risk posed by the pandemic was considered both likely and having severe impact, whereas the cost of preparation and the cost of most responses is rather small.