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Deadly Pandemic May Close Down The Unprepared
February 2007Despite dire warnings from health officials and risk experts, only a tiny percentage of the nation's insurance carriers have developed formal plans to keep their businesses running in the face of a deadly, long-term influenza pandemic.
While 82% of carriers have prepared business continuity plans (BCP) for survival in the wake of natural disasters like hurricanes, tornadoes and floods, only 11% are ready for a pandemic, says Clare DeNicola, president and CEO of IVANS, a Stamford, Conn., company that provides communications services to insurance companies. IVANS surveyed CIOs and directors in May 2006.
These [BCPs] are just not adequate if a pandemic happens because they fail to address most of the issues," says Judy Johnson, vice president and principal solutions architect at Patni Computer Systems Inc., a software and IT services company with global headquarters in Mumbai, India, and U.S. headquarters in Cambridge, Mass.
Consider the possible consequences: "After a disaster, 45% of the companies that experience a major business interruption do not fully recover and, therefore, are not in business five years later," says Johnson. "Some of our huge insurance conglomerates keep rolling along, but small carriers are seriously affected."
Typically, companies plan for the loss of a building but not for the loss of people, says Steve Pearce, director of global business continuity management at Aon Corp., a Chicago-based insurance broker and risk management consulting company. Businesses make provisions for an overnight loss of power, for example, but not for the drawn-out effects of a pandemic, which can linger for 60 to 120 days, he says.
The apparent lack of preparedness persists even though worldwide outbreaks resulted in death tolls in the United States of 675,000 in 1918-19; 70,000 in 1957-58; and 34,000 in 1968-69, according to the Centers for Disease Control and Prevention (CDC) in Atlanta.
The Vietnam War, by comparison, claimed the lives of 58,000 American troops in a decade of fighting.
Although no one can predict when a pandemic will occur, the CDC says many scientists "believe it is just a matter of time."
With that in mind, experts are tracking the avian flu virus H5M1, which displays characteristics similar to those of the virulent 1918 bug and had infected 238 people in 10 Asian and Eastern European countries by Oct. 1, says Aon's Pearce. So far the virus has been transmitted only from animals to people.
But the H5M1 virus or another strain could mutate into a state that transfers easily from one human to another, taking hold in days and spreading around the world in weeks, says Pearce.
"Imagine the virus racing through crowded cities and thriving in the recycled air of continent-hopping jetliners," he says. "Another pandemic is inevitable."
STAYING OPEN
The harsh reality of keeping a business open in the face of a pandemic involves detailed planning because employees are bound to fall ill and some may die. Even those who remain healthy may steer clear of the office to avoid infection or may need to stay home to care for afflicted relatives, says Michael Romano, senior vice president of corporate compliance for Pittsburgh-based carrier Highmark Inc.
In December, after seven months of work, Romano's company completed and began testing a contingency plan for a pandemic. In a sense, however, the company will never finish the project, because management intends to make modifications as business needs change.
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