Fred Hassan: A Case for Calm In The Covid-19 Storm

Business leaders must keep the current crisis in perspective, and avoid the urge to get 'bunkered in,' says Fred Hassan, CEO of Caret Group and former chief executive of the global pharmaceutical giant Schering–Plough.

Last week we saw an unprecedented panic selling of stocks, with the market down 12%, driven by fear of the economic impact of COVID-19. It was a scary time, and I worry there is more to come.

For CEOs, this is the time to lead from the front. Urgency, decisiveness and action becomes the need of the hour—yet the temptation to get “bunkered-in” remains very high. It’s crucial to maintain a calm tone and demeanor while the external storm rages. Broad-based decisions such as “stay at home” should be taken only as needed—and not as a knee jerk reaction.

It may help to put things in perspective, based on the two-month cycle observed in China. So let’s look at the facts.

The initial report from Hubei province went to the World Health Organization on December 30, 2019. The quarantine in Hubei went into effect on January 23, 2020. By January 28, the new cases per day had moved up to 3,200, peaking on February 5, at 5,200. Since then that number has come down steadily to a present level of 200.

The stay-at-home order was lifted on February 25, and people are back at work. The China economy is probably going to see its customary 6% per year growth rate reduced by half in 2020—and then resume the 6% going forward. More importantly, 81% of the COVID-19 cases were mild, and the fatality rate was around 2%, mostly people over 60 with pre-existing medical conditions.

To put that in greater perspective: The total fatality rate from COVID-19 is just 1-2% of the all-cause mortality in Hubei province.

The U.S. has more advanced communications and disease management systems, so I expect the fatality rate here should be well below 1%. Overall this should be a manageable problem. Many preparedness measures are already in place and there is still time for surge capacity planning, where needed.

I like to keep the massive market selloff of October 2008 in mind at times like these. For those that held tight or even bought into the drop, it was one of the greatest opportunities in modern financial history. The biggest opportunities always occur when there is a stampede among others—especially for the CEO who stays in control and acts with urgency, decisiveness and action.

By Monday evening, the Dow was up 1,293 points, or 5.09%.