One could forgive a company executive for throwing up his hands if he hears one more call to prepare his company for a global pandemic of bird flu.

On one hand, Dr. Michael Osterholm, director of the U.S. Center for Infectious Disease Research and Policy, has stated that he believes there is a 100% probability of a global pandemic of H5N1, the strain of avian influenza that international health experts fear could trigger a pandemic as great or greater than the Spanish flu that killed an estimated 50 million people in the years following World War I.

If H5N1 mutates into a form readily transmissible from human-to-human, experts fear that the scope and speed of international commerce and travel could spread the flu throughout the world before public health authorities know what is happening.

Stockpiles of flu vaccine are currently far below what experts believe would be needed to prevent a pandemic if the virus mutates, and the capacity to produce more vaccine is considered to be far below what would be needed to keep pace with the spread of the disease.

Companies are told to prepare for widespread absenteeism, and for the death of critical employees.

Yet, as of mid-2006, fewer than 200 people, many of them living in close proximity to livestock, had died from H5N1. For every factor that could make avian flu a rapid and widespread killer, there is another that could make it just another in a series of deadly but not catastrophic viruses.

As this publication went to press, media reports cautiously indicated that the mutation of H5N1 may be more difficult than first feared, and that production of a vaccine may be easier.

In short, company leaders are implored to plan for an eventuality subject to so many variables as to defy serious planning. Anything can happen, or nothing. How do you plan for that?

Continuity

Given all the uncertainties, the prospect of a pandemic does not lend itself to the classic type of crisis management plan, where a series of steps are implemented once an event or series of events has happened to trigger the plan.

Instead, pandemic plans are really business continuity plans, according to the International Monetary Fund (IMF).

Short of health care providers and public safety agencies, there may be no more important organizations to the functioning of the world’s economy through a pandemic than its central banks.

It is instructive, then, to read what the IMF is recommending that central banks do today, not at some future date, to enable themselves to operate during a pandemic that hits their own staff members.

Among the IMF’s recommendations for business continuity are two operational imperatives relevant to any organization at any time, whether a pandemic occurs or not:

• Implement clear succession planning and procedures for the transfer of authority in the event key managers are absent. Given the characteristics of the pandemic, geographical dispersal of designated successors may be advisable for some firms, reads an IMF report.
• Use telecommunications to implement the capacity to run a de-centralized operation, enabling staff to work from home when necessary while maintaining redundant facilities for actions that must be carried out from centralized locations.

Initiatives such as these are not cost-free. Remote commuting, for example, requires development of security codes to protect proprietary information from outside hackers.

Yet planning along these lines allows executives to devote their energies to initiatives that can serve their companies’ interests, whether or not a pandemic occurs.

Leaders

Operational continuity and telecommuting capability are two leading concerns of major international corporations, according to a recent survey on pandemic preparedness by The Conference Board, a business research organization based in New York City.

Of the more than 500 companies surveyed regarding their preparations for a possible pandemic, 70% are currently enhancing existing capabilities to allow employees to work from home or from a satellite facility during a pandemic, reads a Conference Board release announcing the survey findings.

Regarding workforce continuity, the release states that more than two-thirds of companies plan to continue to depend upon their existing workforce to maintain normal business operations by cross-training employees to be skilled in multiple jobs.

The Conference Board adds that 34% of respondents plan to pool with other organizations, if necessary, to access needed talent, and 25% plan to contract with retired workers to come back temporarily.

In contrast, while expressing concern for the health and welfare of their employees, major international corporations apparently don’t feel it is their place to intervene in the health-related concerns.

For example, three-quarters of the Conference Board survey respondents reported that they had no plans to stockpile anti-flu drugs, and 94% report they have had no discussions with government officials about their organizations providing essential services or access to facilities, equipment, or staff during a pandemic.

Competition

Most observers agree that the threats from a pandemic are less acute for property/casualty insurers than for most other financial service organizations.

While life insurers face a serious risk of loss, insurance exposure for P/C carriers--with the possible exception of those that underwrite poultry operations--is considered to be minimal.

Also, unless a carrier sustains insured catastrophe losses while its staff is decimated by the flu, the issue of service continuity is less great than for other financial services that consumers and business count on a daily basis.

Yet, although it does not focus on P/C insurance, the Conference Board survey suggests that carriers cannot be complacent.

Among the survey’s key findings is that large and publicly-held companies indicate they are far more advanced in the preparations for a flu pandemic than small and mid-sized companies.

Approximately 95% of companies with more than $5 billion in sales either have an up-to-date preparedness plan or are in the process of planning, reads the Conference Board release. But 65% of companies with less than $100 million do not yet have any plans specifically in place.

In short, big companies plan to be ready in the event of a pandemic. Even if one is not severe, their smaller rivals may find themselves outmaneuvered for key markets and customers.