Economic Consequences of a Pandemic ...
Category Business Continuity Management - Avian Flu Pandemic
In another article, published on October 7, 2005 (NewsTarget.com) entitled, “Economic Shock Waves From Avian Influenza Spreading Faster than the Disease” the following is pointed out:
The Avian influenza crisis in Asia has already caused more than $10 billion dollars in damage in the economies of the most-seriously affected countries, but this is just the tip of the iceberg compared with the possible global economic consequences of a human influenza pandemic according to a study, Thinking Ahead: The Business Significance of an Avian Influenza Pandemic, released today by Bio Economic Research Associates (bio-era™).
“According to the quantitative measures we developed for assigning relative economic risk exposure to infectious disease outbreaks for countries in Asia, Hong Kong and Singapore are especially vulnerable to the initial economic shock waves that would ensue from a pandemic,” said James Newcomb, Managing Director and principal author of the bio-era report. “However, the secondary impacts on other countries, especially China, could have far-reaching impacts for economies around the world, including the US,” he added.
Other key findings in the report include:
Avian influenza is the latest in a series of major livestock disease outbreaks that have caused more than $60 billion in economic damages worldwide over the past 15 years.
Concerns about a possible influenza pandemic are already providing stimulus for increased spending and accelerated research and development efforts in some parts of the economy, ranging from custom microarray chips for rapid diagnostic testing to antiviral drugs.
Governments around the world have recently made commitments totaling an estimated $1.4 billion to stockpile oseltamivir (Tamiflu)—an antiviral drug produced by pharmaceutical giant Roche.
Manufacturers of flu vaccines are gearing up for what may be an unprecedented global demand for a vaccine effective against H5N1 variants, but it is not known whether the vaccines being developed now would be effective against the influenza strains that might emerge.
New “DNA vaccines” offer an alternative to conventional production technologies and could speed the vaccine industry’s ability to respond, but these technologies are not yet approved by FDA.
“We’ve been looking at how things might unfold under six very different but highly plausible scenarios for the evolution of the outbreak,” said Stephen Aldrich, President of bio-era. “In the process, we’ve made assessments of potential outbreak risk by country, the relative economic exposure by country — and how selected industries and companies are likely to be affected.”
We have not experienced this type of business problem in our lifetimes. The last generation to have to address such a widespread issue was that of our grandparents and parents during the Great Depression.
During the Great Depression the revenue component of the free enterprise system was significantly impaired. Just as important, today on a worldwide basis we do not have any leadership in business or government who has lived through the 1918 Spanish Flu Pandemic or the Great Depression and so that experience base is lost to us. Our best option, therefore, is to start to think about the possible problems we may have to confront and take steps to avoid or deal with them in our businesses. If we wait until the pandemic starts, it will be too late.
Even if a pandemic were mild, it is estimated that about a third of the world's population would fall sick over a period of months and millions would die. If the strain is virulent, the death toll could mount to several million, over a relatively short period. If we look at previous pandemics (Spanish Flu 1918 – 1919, Asian Flu 1957 – 1958, Hong Kong Flu 1968 – 1969) they generally run their course in 18 to 24 months. As an example, the economic consequences could be staggering; SARS wreaked economic devastation on affected cities and countries in a relatively short period.
The Health and Human Services Department plan outlines a worst-case scenario where more than 1.9 million Americans would die and 8.5 million would be hospitalized with costs exceeding $450 billion.
Current Forecasts – Business Continuity Planners where can you add value?
We often use the phrase “value added” when we promote business continuity planning. We say that we “add value” to an organization by preparing it to respond and recover from incidents. At this time I think that we can earn our keep, so to speak, by providing that “value added” service that we speak of. Current forecasts predict that the H5N1 pandemic will spread around the world in a historically short period of time. One expert stated that if this pandemic is identified on the west coast of the United States it will spread across the country in a week. When SARS spread from China just a couple of years ago, it was in 5 countries in 3 days and in 24 countries in 3 months. Time to react will be virtually non-existent. And if we are to earn our merit as business continuity planners, we need to react now! The companies that survive this extraordinary disaster when it occurs will have heeded the words of Sun Tzu centuries ago, “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” Planning today will prove to be the only viable strategy to ensure a company’s “victory”.
What If…?
What if the pandemic does not materialize? Do we have the proverbial “egg on our face”? In the event that this pandemic does not materialize, your planning will not be lost. Most of it will be transferable. There will be future pandemics (and they occur approximately every 30 – 40 years) and to the ever present threat of terrorist attacks using chemical/biological/nerve agents. Business survivability in the face disasters is imperative to the economic strength of the world community.
We as continuity planners have an obligation to be forward thinking and to see what others choose not to recognize until it is upon them.
Steps to take…Now
The ability to effectively respond to and manage the consequences of an event in a timely manner is essential to ensure an organization's survivability in today’s fast paced business environment. With the emergence of new threats, such as cyber-terrorism and bio-terrorism; and the increasing exposure of companies to traditional threats such as, fraud, systems failure, fire, explosions, spills, natural disasters, etc. an “integrated” approach to Business Continuity Planning is essential. The “integrated” approach, as presented in this article, is based on the concept of graceful degradation and agile restoration. “Graceful degradation” refers to the ability of an organization to identify the event, classify it into a level of severity, determine its consequences, establish minimal stable functionality, devolve to the most robust less functional configuration available and to begin to direct initial efforts for rapid restoration of services in a timely fashion.
Several steps can be taken to prepare your organization. First, put in place an effective surveillance program; meaning, expand your business impact assessment activities. In my article, “"Futureproofing" - the Process of Active Analysis” written in 2003, I recommended that we rethink the business impact assessment process:
Traditional analysis such as that performed at the initiation of the business continuity plan development is recognized as necessary to develop a baseline of information. However, it should also be recognized as having certain limitations:
• Pre-Event - Best guess as to what could occur
• Static - Best guess based on available facts and models
Traditional analysis creates undecidability due to the inability to predict all behavior in a dynamic environment. Therefore one should adopt an Active Analysis methodology, such as that developed by Logical Management Systems, Corp. (LMS). LMS' methodology is based on the U.S. Military's "Joint Special Operations Targeting and Mission Planning Procedures" (JP 3-05.5 10 august 1993). It is detailed herein.
The advantages that can be realized by adopting this methodology and maintaining an active analysis process are:
• Uses Static Analysis as a basis
• Touchpoint complexity factors
• Dynamic - based on creating a mosaic
• Time Factors (Time Critical, Time Sensitive and Time Dependent) act as drivers
Termed "Futureproofing" by LMS the active analysis process is designed to create a mosaic that enhances decision making by identifying behavior patterns in a dynamic environment.
