Planning for a potential pandemic

Small, privately-held companies are most at risk if an avian flu pandemic or similar disaster ever materializes. But failure at these firms could significantly impact markets by disrupting supply chains and in some cases unravelling contingency plans made by larger companies.

A recent Conference Board survey of 553 global companies found that most companies say they have risk mitigation strategies in place, “But the effectiveness of business plans and the quality of the relationships necessary for their successful implementation in times of extreme public, private and social stress remains open to question,” cautions research director David Vidal.

One quarter of survey respondents do not have a specific avian flu preparedness strategy. Half of these do not see such planning as a current business priority and 20% say their existing business continuities plans are adequate to manage the threat. Approximately 95% of large and publicly held companies with more than $5 billion in sales, though, have up-to-date preparedness plans or are in the process of creating them. The small and privately held companies however, represent the majority of those without a plan — 65% of companies with less than $100 million in sales to don yet have any plans specifically in place to address the impact of an influenza pandemic.

Furthermore, researchers say almost all companies, large and small alike, including those in “critical industries”, have failed to have any discussion with government officials. A critical industry is defined as those designated by government as vital to national economic continuity in a crisis.

“The variability of business responsiveness to planning alone, underscores vulnerability in the current state of pandemic readiness planning,” says Vidal. “Given that successful pandemic containment would require extraordinary levels of business, social, governmental and individual awareness, knowledge and cooperation, these gaps provide reason for pause.”

Healthcare companies, and those in energy and utilities, chemical manufacturing and computer technology manufacturing industries ranked at the top for having a plan in place ore being in the process of creating one. Healthcare and computer technology firms were furthest along in their planning efforts, with 30% saying they have a complete plan ready in the event of a pandemic. Overall, one third of companies surveyed have completed the task of identifying critical positions in their respective organizations. Survey findings also show that organizations say roughly 37% of their total workforce would be critical for operational continuity. Most companies are expected to rely on technology so employees will be able to continue to work away from the workplace.

“While telecommuting may alleviate some business disruption, the downstream effects stemming from supply chain disruption will likely remain significant,” says Amy Kao, co-author of the Conference Board report. “In fact, about half of survey participants predict that impact from delivery and supply chain disruptions will be very serious or extremely serious.”

Finally, researchers say there doesn’t seem to be a strong consensus about the criteria that would activate an organization’s pandemic preparedness plan and almost 30% of those surveyed said they did not know if their organization’s board of directors has discussed planning for a pandemic. Ten percent say their board has adopted a formal policy, 22% say the board has discussed planning but hasn’t adopted a formal policy, 14% say the board plans to discuss pandemic planning and 21% say their board has no plans to address the issue.

Filed by Kate McCaffery, Advisor.ca, kate.mccaffery@advisor.rogers.com