Volume 4 | Issue 1 | Year 2008

According to experts, including the World Health Organization (WHO), an influenza pandemic is inevitable. The pandemic will spread along supply chains, making businesses especially vulnerable to the disease and to measures taken to protect public health. Fortunately, best practices are emerging: businesses can protect their employees and their supply chains if they prepare now.
On Sept. 27th, The Albright Group and Marsh warned businesses of the risks of a pandemic. Avian flu in Asia is the possible precursor of a pandemic that could reach every continent within two weeks, if the virus spreads from person to person. A quarter of the world population may eventually be infected when a pandemic hits.

The risk for business is especially acute. The pandemic would spread along supply chains. Key outsourcing locations could be hard hit, and transportation threatened. Public health measures, such as quarantine, could jeopardize fast-moving goods and services.

It is possible to prepare, however. We know a great deal about how the pandemic will spread, and models of the speed and scale of its impact on business are available. With that knowledge, we can predict specific effects of the illness on the workforce and learn from the best practices that are emerging for minimizing these impacts.

In recent years, the public sector has moved forward quickly, possibly more quickly than businesses. The WHO, led by Dr. Margaret Chan, has implemented an improved surveillance system – the international health regulations (IHRs) – that requires governments to cooperate with the WHO and immediately report potential pandemics. Dr. Chan has also announced plans to create a global stockpile of avian flu vaccines. She deserves credit for moving national governments and international organizations to prepare aggressively.

In the face of public sector activity, private enterprises are now recognizing that they too have obligations to their stakeholders to limit the damage a pandemic will have on their supply chain, their employees and, ultimately, their businesses.

What are the roles and responsibilities of CEOs before and during a pandemic?

The effects on society may be complex and far reaching, but the critical issues that companies must acknowledge boil down to just a few.

• Taking the First Step

CEOs must acknowledge that pandemics are inevitable and that their effects will be catastrophic. Only then can they start to develop and implement strategies to manage the challenges that the pandemic will present, such as mass absenteeism and disruption to vital business processes.

It is important not to panic or go into denial. The effects of a pandemic could be felt within a matter of days; preparations to deal with it will take many months, so there should be no delay in starting the process. This is not a time for heads to be buried in the sand, nor can confusion be allowed to paralyze the planning process. Strong leadership from the top is critical in the face of this impending crisis and there is no better opportunity than this for CEOs to show their determination.

The business world has had to deal with it before – immediately after World War I, when the Spanish flu pandemic killed 20-40 million people, more than the number killed in the war; and again in the late 1950s, when the Asian flu epidemic killed approximately 2 million people worldwide.

Businesses responded to depletion of the workforce in the 1919 pandemic by reconfiguring their operations. They introduced more automation and recruited from a female population that had previously stayed at home. Within a relatively short time the business economy regained its momentum and new thinking that was forced on management during the crisis began to pay dividends.

Today, the full impact of a pandemic will be felt far more quickly than in 1919. Globalization of business means that supply chains can immediately be disrupted by outbreaks in other countries. Added to this, global travel for business and leisure will spread the disease across the world at great speed. The trade and transportation networks that deliver the life blood of global business will also provide pathways along which viruses will travel.

• Testing Times

In developing and testing their plans, businesses in Europe can take a lead from ‘Winter Willow’, a UK exercise earlier this year involving 5,000 employees from government, industry and the voluntary sectors. This exercise tested responses to a major crisis by simulating the effects of a flu pandemic in London and other UK cities. It provided a wealth of information on the suitability and effectiveness of the plans and provisions that had been made. It has also led to important improvements in these preparations.

Worldwide, the public sector has been advancing rapidly in its preparation for a pandemic. US federal and state governments, for example, have bought 43 million treatment courses of the anti-viral Tamiflu and aim to raise this figure to 81 million.

Governments’ priorities are to safeguard critical infrastructure and public services. But they also recognize that all parts of society must mobilize and coordinate efforts to meet the pandemic challenge. By protecting employees and their families, businesses can support government in its responsibility to protect the population as a whole.

To be effective, public/private partnership must be built on close coordination. Mechanisms to avoid duplications or omissions in the joint effort must be established well before the event. To this end, the public and private sector should hold discussions in advance to determine what each can expect from the other and how they can work together.

• Profiling Vulnerability

Like governments, businesses need to keep critical processes running. All mission critical aspects of the organization, including maintenance of essential electronic systems, need to be incorporated in the company’s vulnerability profile. Using this profile as a basis, suitable alternative supply chains, logistics and working practices can be specified and pre-qualified.

Specific actions may include implementing and testing technology to provide tele-working options for key staff. Communication and collaboration with supply chain partners can be improved, on-site materials stock levels can be reviewed and backup utilities up-graded.

A dialogue should also be opened with firms that produce treatments. These firms, with years of experience in producing and distributing medicines for pandemics, have an invaluable store of knowledge on how pandemics will progress and strategies that are most effective in improving the effectiveness of medicines.

• Securing Supply Chains

As well as its own employees, a business should make the security of its supply chain a priority when preparing for a pandemic. Pandemic fatigue in some countries has kept suppliers from preparing effectively. As late as 2006 in Asia, where the perceived urgency of this risk is greatest, fewer than 25 percent of businesses had pandemic plans in place.

If any company in a supply chain still believes that pandemics are unlikely, or too unpredictable to prepare for, the whole supply chain is at risk. There is no effective risk transfer mechanism for a pandemic, so planning and mitigation activities are the first and last lines of defense. All partners in a supply chain must work together to give it the resilience it must have to survive when the worst happens. Ideas of best practices in planning and mitigation are already well developed. Since the SARS outbreak, some businesses and governments have begun to implement practical, effective measures to protect business models. A full range of key stake holders including materials, service and utility suppliers are accounted for, as well as employees. Alternative sources, supply chains and ways of working have been developed and anti-viral treatments stockpiled.

Measures such as these will allow a business to continue its operations during and after a pandemic. Delay in implementing them, in the face of an impending event that is accepted by governments and health authorities as inevitable, is a failing in corporate responsibility.

Report available at: http://global.marsh.com/risk/pandemic/pandemic2/index.php (The independent development and publication of this document by Marsh Inc. and The Albright Group, LLC was funded through an educational grant provided by F. Hoffman-La Roche Ltd.)

James C. O’Brien

Principal of The Albright Group LLC

James C. O’Brien is a Principal of The Albright Group LLC, a global strategy firm, and of Albright Capital Management LLC, an investment advisory firm focused on emerging markets. He has nearly 20 years of high-level experience working with international businesses, governments and nongovernmental organizations.

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