As the coronavirus continues to impact the global economy, Charles Hepworth, Investment Director, GAM Investments, discusses the risks that a second wave of epidemics could pose in the future.

The operating environment for European banks will be challenging, but resolution and senior debt bail-in are extremely unlikely. Banks will have to be a key piece of the puzzle as authorities seek to minimise long-term economic loss.

Markets last week scrambled to come to terms with two major exogenous shocks: the spread of the COVID-19 virus and the oil price slump. Such shocks to the global economy are rare. Two huge and unconnected shocks coming within days of each other is an unprecedented event.

This new risk indicator, based on a concept derived from the classic Sharpe ratio, integrates the already existing range of prudential risk measures into the analysis of the strategic asset allocation process and its optimization.

As the virus outbreak spreads well beyond China, it is hard to forecast exactly what the economic impact will be, but it's safe to say that consumption and supply will be significantly affected