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Global Corporations Struggle to Plan For Pandemic

July 10, 2006

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A significant majority of global corporations currently have either a detailed avian flu pandemic readiness plan in place or are in the process of developing a plan, according to a report released by The Conference Board.

Nearly three-fourths of the 553 responding global companies either have a plan or are well into developing one, and 85 percent of the survey participants began their planning efforts within the last 12 months.

"As concern about the possibility of an avian flu pandemic becomes increasingly widespread across the globe, a large number of companies are taking steps toward adopting a risk mitigation strategy," says Amy Kao, co-author of the report from The Conference Board with David J. Vidal, Research Director, Global Corporate Citizenship, The Conference Board.

"The effectiveness of business plans and the quality of relationships necessary for their successful implementation in times of extreme public, private and social stress remains open to question," Vidal added.

Of the one quarter or so responding companies without a specific avian flu pandemic preparedness strategy, about half of them simply do not see such planning as a current business priority; while 20 percent feel that their existing business continuity plan is adequate to manage the threat.

"Small and privately held companies represent the majority of those without an avian flu plan and are therefore the organizations most vulnerable to the risks of a pandemic," say Kao and Vidal.

Large and publicly held companies appear to be the most advanced in their preparations for a possible avian flu pandemic. Approximately 95 percent of companies with more than $5 billion in sales either have an up-to-date preparedness plan or are in the process of planning. But, 65 percent of companies with less than $100 million do not yet have any plans specifically in place addressing the impact of an influenza pandemic.

"The variability of business responsiveness to planning alone—with large companies more willing and able to do so than smaller companies—underscores vulnerability in the current state of pandemic readiness planning," said 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."

No Coordination

According to The Conference Board report, the most significant disadvantage in not conducting formal pandemic preparedness planning may be the virtually total absence of coordination with the public sector.

An overwhelming 94 percent of participating companies report that they have not had discussions with any level of government officials about their organization's ability to provide essential services or access to facilities, equipment, or staff during a pandemic.

In addition, the gap in readiness efforts is significantly felt between those companies in critical industries and non-critical industries. A critical industry is defined as those designated by government as vital to national economic continuity in a crisis. Companies in the healthcare, energy/utilities, chemical manufacturing, and computer/technology manufacturing industries ranked at the top for either having a plan in place or being in the process of planning.

Health care and computer/technology manufacturing industries are farther along in their planning efforts, with 30% of those in both industries having a complete plan ready in the event of a pandemic.

Since most companies surveyed began pandemic preparation planning in the last 12 months, survey results showed companies in all phases of planning, from those with a completed pandemic preparedness plan to those in an embryonic stage of having identified a pandemic coordinator but not yet beginning the planning process.

However, the majority fall somewhere in the middle of the spectrum, either in the process of updating a plan that is already in place or assessing the impact of a pandemic prior to drafting a plan.

In the event of a pandemic, companies are most concerned about the health and welfare of employees, operational continuity, and their telecommuting capabilities to enable employees to work from home.

Identifying critical positions within an organization constitutes a basic first step toward minimizing business disruptions. A third of companies have completed the task; just under half are in the process of identifying critical positions, and the remaining 20 percent have not yet begun the process but plan to do so in the future.

Survey findings indicate that a median of 37 percent of the total workforce within an organization are considered critical for operational continuity. In anticipation of high absenteeism, 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. Two-thirds of survey participants don't know whether employees who are asked to cover for absentees will be offered additional compensation.

Some companies plan to gather additional human resources by pooling with other organizations and contracting retired workers to come back to work temporarily to ensure that critical positions are filled.

Most companies are expected to rely on IT technologies so employees will be able to continue to work away from the workplace. Seventy percent are currently enhancing existing capabilities to allow employees to work from home or from a satellite facility during a pandemic. Firms say that they intend to use emails, intranets, management briefings and crisis hotlines, when given a choice of which methods of employee communications they plan to use.

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

There doesn't seem to be a strong consensus on any specific criterion that would activate an organization's pandemic preparedness plan. Close to one-third of the survey participants report that their plan will be activated when the World Health Organization (WHO) declares Alert Level 4 (increased human-to-human transmission).

Eighteen percent said that their plan would go into effect when a pandemic situation is declared in a country where their organization has operating presence; while 15 percent simply don't know.

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