Covid-19 and Brexit will dominate the business and economic outcomes for Ireland, and for Ireland’s financial services industry for the rest of this year, and for much of 2020. Both involve uncertainty, and risk. In the context, it is worth considering the subtle differences between risk and uncertainty, for they are not exactly the same things, as most of those those working in the financial services industry will (or should) know.

Risk management involves the calculated process of decision-making in the light of uncertainty. The standard normal distribution of events according to probability theory, has been a valuable tool in helping risk managers to successfully manage risk. Math models developed prior to the GFC made much of this, until the time came for the model to be put to the test. This happened and ‘tail risk’ (which the model predicted was always there) came to the fore in the form of the 2007-8 ‘Black Swan’ meltdown of securitised property markets, which of course led to the domino effect of collapse across financial markets and centres around the world in 2007-2008.

This year’s Pandemic is another example of tail risk coming to the fore, proving, yet again, that uncertainty is a permanent condition of our existence.

Financial services has developed a tool for dealing with uncertainty. It is called insurance. It operates by the principle of ‘the many protecting the few’, and it is the appropriate financial risk management tool for addressing uncertainty, such as that associated with Covid-19 and its effect on our lives and businesses.

Brexit and its outcomes over the coming six months lies more in the realm of human endeavour, and while business decisionmakers will have little impact on its macro outcomes, at least they can act perhaps in a more calculated risk management basis.

Brexit will offer opportunities for the Irish financial services industry ongoing, no matter what particular deal, or ‘no deal’ emerges. Either way, there will be tax and regulatory challenges and difficulties to overcome. but in meeting those challenges, the Irish financial services sector, across the board can deliver business winning outcomes by looking to positive ways in which the Irish jurisdiction can be used to provide a platform for continuing the harmonious cooperation between London, and the UK as a financial centre and the EU27. It can not be emphasised often enough in this context that Ireland’s heritage as a common law jurisdiction, and as an English-speaking country provide natural advantages for this, just as it has in the past provided a platform for US businesses to access EU markets.

The recent appointment of senior and leading Irish politicians, notably Paschal Donohoe, as chair of the influential Eurozone committee of Finance Ministers and the appointment of Mairead McGuinness as FS Commissioner, (the second time a top Irish political talent was awarded that role) are at the very least an honour for Ireland as a jurisdiction, and a signal from Europe that this very role for Ireland as an FS centre going forward will be welcomed by Ireland’s 26 partners in the European Union.

McGuinness has demonstrated impressive diplomatic skills in her role as vice president of the European Parliament, and as viewers of the BBC 's Question Time will testify, is capable of generating a warm and respected rapport with Brexit-focussed British audiences, a skill that will serve Europe and Ireland's (and the UK's) cause well in the post Brexit period as Financial Services Commissioner.

(Editorial: in September edition of Finance Dublin, published this week.).