Op-ed by President Werner Hoyer: The coronavirus, or why we need to rethink risks

(Source: EIB)

For a better way of dealing with threats like the pandemic in the future, governments should appoint a chief risk officer, Werner Hoyer writes in a recent op-ed published by Handelsblatt. 

We haven’t conquered COVID-19 yet, but we are starting to see light at the end of the tunnel. Thanks to vaccines developed in record time, accelerated vaccination campaigns, travel restrictions and the sheer common sense of much of the population, we in Europe can start thinking about how we will live and work in tomorrow’s new normal – even though countries such as India and Brazil, where new variants of the virus are raging worse than ever, still need our help.

With the new normal drawing ever closer, we must not forget to take stock of the fundamental lessons the health crisis can teach us. We need to find a better way of addressing the risks posed by a globalised world.

COVID-19 has made it only too clear that perils such as the climate crisis, the uncontrolled use of artificial intelligence or pandemics are not just the stuff of crisis simulations or problems of the distant future. We must find answers to these challenges as soon as possible and become more alert to risks. In the process, politics can, and indeed must, learn from business: we need more professional risk management in our governments so that we can start preparing our societies for tomorrow’s crises today.

Even the coronavirus pandemic was only really a surprise in terms of when it actually struck. For decades now, voices had been raised in warning, and we had seen concrete scenarios and, to a lesser extent, actual epidemics. In crisis simulations, scientists foresaw how the pandemic would play out with terrifying accuracy. The only thing they couldn’t predict was the timing, so the issue remained abstract for the political realm.

Doctors have also been warning of the dangers of increased resistance to antibiotics for years – the next global health crisis is already on the horizon. We could end up in a situation where even routine operations cannot be performed because antibiotics will no longer work and a simple bacterial infection would kill the patient. Multidrug-resistant germs could unseat cancer and cardiovascular disease as the number one cause of death in the near future. The problem is that developing new reserve antibiotics is not commercially attractive, because the goal is to use these drugs as rarely as possible to limit the risk of resistance being built up. We urgently need more investment here – but once again, the risk seems too abstract for it to receive the attention it warrants.

To tackle these dangers facing humanity before it is too late, we need better risk management at political level and more professional cooperation between governments and business. Because one thing is clear: the new threats we are facing will need more than stopgap measures if they are to be dealt with successfully. We need to think faster and more radically – we need to anticipate risk and uncertainty.

But what does that actually involve? We should take small, manageable risks in developing new technologies so that we are properly equipped to deal with the major, far less manageable risks when they materialise. We must invest sufficiently in research and development today to have the tools we need tomorrow to halt the spread of multidrug-resistant bacteria quickly. Or the tools to find new, even better ways of producing and storing carbon-neutral energy.

This requires interdisciplinary, scientifically sound and long-term oriented action. In the political day-to-day life of a legislature, this is difficult to maintain. To place risk management at the heart of government action in our rapidly changing world, we should create the role of state chief risk officer. He or she would, with scientific support, assess the risks facing society as a whole. With a team from a variety of backgrounds, the officer would systematically document potential natural disasters, looming environmental damage, health crises and the competitive consequences of technological progress – and bring in experts to develop solutions. A team of this kind under the leadership of a chief risk officer would always be superior to ad hoc expert committees hurriedly set up when the need arises. Moreover, a chief risk officer could prevent governments from simply blanking out the long-term consequences of their actions – or lack thereof.

The chief risk officer’s recommendations would feed into an investment strategy, which governments would then roll out with the involvement of private investors. The European Investment Bank (EIB) could play a pivotal role here by identifying appropriate investment targets and mobilising private capital – in short, replicating its success in helping to develop vaccines, therapies and medical aids in the fight against COVID-19.

The motto for financing possible new technologies such as mRNA vaccines should be: “fail early and often.” We must invest in a variety of promising approaches, experimenting boldly and learning from mistakes before they cost us dear. To do so, we also need a new venture capital culture in the European Union. In contrast to the “old continent,” even conservative institutional investors in the United States invest massively in startups and young technology companies. The consequence is that although their economies are similar in size, the European Union has only about one-fifth of the venture capital available in the United States. 

Our policies must provide the right incentives and conditions to encourage greater use of venture capital, thus fuelling competition for the best solutions. At the same time, they must resist the tendency of coming out in favour of a fledgling technology too soon, and then supporting it with subsidies.

Uncertainty is all part of progress; it is the background noise of a complex world. Our goal should be to act rationally – to investigate things instead of fearing them and allowing our fear to paralyse us. Rational, scientifically sound government action will ultimately lead us out of the coronavirus pandemic, even though our path has not always been straightforward. Without early investment in a new vaccine technology, even the smartest policy would have been useless. The fact that we can talk about the new normal today is thanks to companies such as BioNTech – a prime example of the interaction of research and entrepreneurship, private venture capital and public support, including support from the EIB. If we work together to set up a framework that would enable people to reach their full potential – people just like husband-and-wife research team Ugur Sahin and Özlem Türeci – we will have every chance of surmounting even the greatest risks facing humanity.

This article was originally published by Handelsblatt in the German language.
The original publication date was 27/5/2021.

Translated with permission from the publisher.

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