Holistic Framework for COVID-19 Pandemic as Systemic Risk

Abstract

Purpose: The aim of this study is to provide knowledge to manage the holistic nature of the COVID-19 pandemic. Design/Methodology/ Approach: The theoretical framework of COVID-19 research forms a matrix of multidiscipline scientists from medics, epidemiologists, sociologists, economists, and full life cycle performance. This ground level creates systemic risk in form of White Swan. The next layer are costs of pandemic private, public, club, merit costs. This is Black Swan model of COVID-19 pandemic as systemic risk. In the top layer we see Green Swan and pure uncertainty. Each of the elements of a Systemic Matrix is different in every country. Findings: In our opinion, COVID-19 pandemic should be described in the language of systemic risk. There is uncertainty if nature of COVID-19 is endogenous or exogenous? The matrix of COVID-19 understanding is crowned by well-being and the perception of the risk of COVID-19 among the various participants in the economy. Practical Implications: Knowing that COVID-19 pandemic is Green Swan we may use Resolution Funds to support Public-Private network for testing and vaccines. Originality/value: Our theoretical language opens cross disciplinary communication on COVID-19 pandemic. Now, we can discuss on distribution of cost of COVID-19 pandemic between participants of this multilevel systemic process. This is also cost of blocked transgenerational transfers. Some people lost life, some lost social capital because of the loss of grandparents.

Initial conditions and cross-country macroeconomic impact during Covid-19

“…Alternatively, systemic risk management studies have argued that Covid-19 and similar health emergencies could be categorised as 'green-swan events' that could be predicted and managed with sound ex-ante measures (Solarz and Waliszewski, 2020). From the historical perspective, Covid-19 has also been described as a 'transforming event' because its impact remains openended (Fishman, 2020).…”

“…The coronavirus disease 2019 (Covid-19) was a large-scale event that affected economies far and wide at different scales and scope (Beßlich, 2020;Solarz and Waliszewski 2020). Unlike the other pandemics in history, seven of the top ten countries affected by Covid-19 namely the United States, China, Japan, Germany, United Kingdom, France, and Italy were also the largest economies in the world that accounted for 60 percent of global supply and demand, 65 percent of manufacturing, and 41 percent of manufacturing exports (Baldwin and di Mauro, 2020).…”

“…Such interconnectedness implied disruptions across economic output, supply and demand, value chain, and investment shocks to other countries tied to these large economies. Furthermore, the pandemic was experienced in a wave-like fashion successively across multiple countries and even across the same country during different time-spans which transformed what was perceived initially as an exogenous shock, into a systemic risk (Solarz and Waliszewski, 2020). Finally, Covid-19 also brought out the gap between capacity and challenge for many countries, exposing the need for leadership to tackle this challenge through international collaboration, cooperation, and cohesive policy vision.…”

Insights from the COVID-19 Pandemic for Systemic Risk Assessment and Management

“…Hence, a policy mechanism that facilitates 'systemic risk governance' is much called for." Solarz and Waliszewski [9] argue for understanding the holistic nature of the COVID-19 pandemic, and they suggest that "in the long run, it will be possible to monitor the pandemic via an integrated, holistic system of systemic risk management." However, neither Amaratunga et al nor Solarz et al have developed methods or policies for systemic (holistic) risk assessment and governance.…”