Absence of planning

See also: Managing new risks

A flu pandemic is a key issue for business continuity and a serious concern for risk managers.

In a study of European risk managers' fears by StrategicRISK most respondents said pandemics were a genuine concern. While academics have found that the probability an influenza pandemic could adversely affect a company’s employees was greater than the probability that a fire could adversely affect a company’s property. The cumulative probability of a pandemic over time is predicted to be in the range of 3-10% for 2008, 14-41% by 2012 and 26-65% by 2017.

Given that the real risks associated with a pandemic are in the realm of business continuity, insuring against these risks alone is not an adequate response. A pandemic could seriously disrupt business operations by increasing absenteeism, by around 35% according to estimates, and affecting the movement of goods and services. In an increasingly interdependent world, bankruptcy is a threat for many organisations.

In order to keep their business running companies need to have robust continuity plans in place. They may also be required to make radical changes to the way they work to maintain their key services.

Despite this, leading academics have pointed out that there is a serious lack of government guidance provided to businesses on the issue of pandemic planning. Out of 30 governments surveyed, over a third offered no advice at all and only 8 provided significant levels of advice. In terms of themes covered, the governments of Ireland, Malta, Spain and the UK issued the most advice. Belgium, Turkey and Denmark released the least.

There is an urgent need for more advice and collaborative work, said the report from the London School of Hygiene and Tropical Medicine (LSHTM).

The report assessed the breadth and depth of guidelines currently on offer and highlighted some of the gaps in advice. The authors recommended that more attention should be paid to areas where insufficient advice is available for organisations wanting to ensure business continuity.

One of the main areas earmarked was developing an overview of the possible risks and impacts of a pandemic. The report said this should be used as the basis for planning.

“More advice should be available for organisations seeking to purchase, store and distribute antivirals.

It is important for employers to assess the resiliency of the supply of the most essential services, such as water and power, and to plan for alternatives in case of disruption by their main providers. Businesses might be forced to temporarily close some units or shut down entire operations in the event of a pandemic and this needs to be incorporated into planning.

A lack of clear guidance on how to manage employees who are ill at work indicated that more needed to be done in this area. The report advised employers to consider taking more safety measures such as increasing social distancing at work and improving office hygiene.

Staffing policies should be thought through in advance. If businesses plan on significant amounts of home working they should test their capabilities beforehand. IT experts suggested that companies which do not ordinarily do much home working may struggle during a pandemic.

More advice should be available for organisations seeking to purchase, store and distribute antivirals at work and to determine how this could fit into a national or international response, said the LSHTM.

Communication was another area that lacked clarity. The report advised employers to try to anticipate employees’ fears and to address them as part of their education strategies. If employees are scared they may refuse to come to work.

The report also suggested that legal issues arising under a pandemic are not addressed by most organisations. Companies may be legally bound to fulfill their obligations towards employees, clients and suppliers even in the time of a pandemic. A consistent approach that compares well to peers could be the best way to avoid litigation, noted the experts.

Businesses may not be able to reduce the risk to zero but that does not mean action shouldn’t be taken. Professor Amin Mawani, a professor at Schulich School of Business in Toronto, said: ‘Competitors who have prepared themselves for a pandemic can have a unique window to steal market share during a pandemic, as well as to make strategic moves that may be harder to reverse later.’

FOR A DETAILED ANALYSIS OF HOW EUROPEAN RISK MANAGERS CONSIDER THEIR PANDEMIC PLANNING SEE THE SEPTEMBER ISSUE OF StrategicRISK.