Simulated exercises of a flu pandemic show firms have not planned adequately for business continuity.
Although a flu pandemic has not broken out for decades, the U.S. government recognizes that the next one could come at any time. As a result, it conducts pandemic games much the way that the Defense Department runs war games.
One exercise run by the U.S. Treasury Department in 2007 included more than 2,700 financial sector participants. It postulated that a lethal strain of flu had swept across the United States six weeks after the first clusters of a highly transmissible strain of the H5N1 virus were confirmed in Africa, the Middle East, Europe, and South Asia. Hospitals, particularly intensive care units, were quickly overwhelmed. Ventilators, beds, and trained personnel were scarce. Antiviral supplies were exhausted halfway through the crisis. Development of vaccines for the strain would take months to develop. Absenteeism reached 50 percent, power supplies faltered, and garbage piled up in city streets.
A similar exercise run in 2006 by the U.K.’s Financial Services Authority (FSA) found that Britain’s financial sector handled the emergency well at first. But problems became unmanageable as successive waves of the disease infected previously healthy people. After a month, banks and brokerages were operating with less than half their usual staff, says Richard Maddison, deputy head of business continuity at the FSA. Some were down to 40 percent of their normal headcount.
“Firms found they did not have enough planning for two or three waves,” he says. “Companies weren’t confident that staff working from home could use their laptops. Power outages lasted longer than three hours, and they couldn’t recharge their batteries in time.” Office workers “had to start sharing passwords. Record- keeping degenerated. People had to improvise.” There were other, more mundane but important issues, Maddison recalls, such as “who would clean the toilets?”
The British exercise was more elaborate and lasted longer than the U.S. exercise, but it included only 70 major institutions, mainly those operating in London’s financial district.
Government and private sector participants in both countries say they have absorbed the lessons of the exercises, according to Maddison, who, along with Valerie Abend, deputy assistant secretary for critical infrastructure protection and compliance with the U.S. Treasury Department, spoke at this year’s World Conference on Disaster Management in Toronto.
Unfortunately, the lessons learned do not seem to have spread far beyond the financial industry. Many European companies and government agencies are still ill-prepared for a pandemic emergency, according to Richard Coker, a health policy researcher at the London School of Hygiene and Tropical Medicine, who told conference attendees of a study analyzing European pandemic policies.
Coker found that most of the information government agencies give companies is inadequate. Few corporate plans mesh with regional, national, or global plans. There is insufficient attention to legal issues and internal communications.
Coker says Ireland, France, and the United Kingdom have good pandemic plans, but many of the smaller EU member states do not. Large companies, especially in the energy and financial industries, have planned well, whereas smaller companies have not. Coker warns those that have strong plans not to be complacent: “In a crisis, we would have complex feedback loops that make it very difficult to predict effects.”
It is not hard to understand why companies are not taking the risk of pandemic flu more seriously, says Amin Mawani, a business professor at York University in Toronto. Although the chance of a flu outbreak impacting a company is three times greater than a fire, he told attendees, business executives probably feel daunted by the complexities and cost of planning. In addition, bosses may have trouble focusing on nonbusiness issues. But they need to understand, says Mawani, that a pandemic will profoundly affect a company’s future. Its employees, supply chains, stock price, market share, and balance sheet will all be at risk.