A 2008 World Bank study estimated that a severe worldwide influenza pandemic could cost about $3.1 trillion and shrink the worldwide gross domestic product (GDP) by 4.8 per cent. This adverse impact is almost four times the impact of the current economic global recession that will shrink the global GDP by 1.3 per cent, as estimated by the International Monetary Fund (IMF).
Companies should not become complacent about planning for pandemics just because the current strain of the H1N1 virus has proven to be relatively mild, says Professor Amin Mawani, associate professor of the Health Industry Management Program at the Schulilch School of Business at York University in Toronto. No one knows what may happen with the strain as Canada approaches the traditional flu season in the fall.
At a recent Corporate Risk Managers’ Roundtable on Pandemic Preparedness, hosted by the Schulich School of Business, corporate risk managers from major industries across Canada came together to exchange ideas and share practices in influenza pandemic planning. The resulting report was presented recently at the World Conference on Disaster Management in Toronto, and provides concrete “best practices” from companies already in the midst of planning for a potential pandemic.
“Large Canadian corporations understand that pandemic preparedness plans are critical to the health of their bottom line and have invested considerable resources to strengthen existing plans,” says Professor Mawani the report’s author. “Discussion at the Schulich Roundtable indicated that some of corporate Canada’s current practices for pandemic preparedness include ongoing communications with employees hand hygiene, travel restrictions, and access to sanitizers and related supplies for equipment handling.”
The Schulich report goes on to suggest that corporate risk managers may need to consider and implement other measures to reduce the risk of employee infection. These additional measures may include what they have already put into place, as well as new strategies such as social distancing, personal protective equipment, antiviral stockpiles, and self-quarantine. Many corporations have already considered remote work potential, staggered work hours, and limited entry and exit to facilities. They also have instituted policies for managing sick employees, and managing communications and the corporate website for emergency plans.
The Schulich Roundtable was held on May 6, 2009 in the midst of a World Health Organization (WHO) pandemic alert Phase 5 due to the influenza A/H1N1 (human swine flu) virus. Recently, the WHO elevated the pandemic alert to Phase 6, which means a full-scale pandemic – even though it is not backed yet by a very strong virus.
According to WHO, the next several months could see the new H1N1 flu virus continue to spread around the world, reaching further into the southern hemisphere during the winter season, then possibly resurging in the northern hemisphere come fall. WHO also warns of the potential that the disease could combine with other flu strains, including the H5N1 bird flu virus.
Business case for pandemic plans
For individual companies, the biggest cost associated with an influenza pandemic would be employee absenteeism. It is estimated that some 15 to 30 per cent of employees would stay home during a moderate to severe pandemic because of illness, family-care responsibilities, and fear of being infected in the workplace. Since employees are the principal profit drivers in most corporations, prolonged absenteeism would have a significant adverse impact on a corporation’s revenues and profits.
The report highlights that companies capable of preventing absenteeism during a pandemic will be well-positioned to take away customers and market share from those that cannot. Even if a severe pandemic never occurs, suppliers that have a reputation for being prepared may have a distinct competitive advantage over those that do not.
The roundtable discussion also highlighted that Canadian companies regularly purchase insurance against risks like fires even though statistics based on insurance data in the U.S., Canada and Europe suggest that the probability of a fire is approximately 1.8 per cent per 100,000 square feet of commercial facility – significantly lower than the probability of an influenza pandemic. And, as pandemic risks become more widely accepted, unprepared companies may find themselves legally liable to their stakeholders – including shareholders (for potential poor returns), employees (for potential inadequate or unsafe working conditions) and customers (for potentially breaking contractual commitments during a pandemic).
“Investment in pandemic preparedness can be viewed as insurance,” says Professor Mawani. “The use of all combined best practices can and must be evaluated by senior management when employees are the key profit drivers in most organizations.”
The Schulich Roundtable was held on May 6, 2009. Participants included Canadian-based risk managers and business continuity directors from nine large corporations in the airline, banking, consulting, mining, real estate, restaurant, telecommunications and utilities sectors.
The Report on the Corporate Risk Managers Roundtable on Pandemic Preparedness was funded through an arms-length research grant by Roche Canada. A copy of the full Schulich School of Business study is available at www.schulich.yorku.ca/pandemic.