In the News

May 8, 2009

Is your business ready for a pandemic event?

On March 28, 2009, the Centers for Disease Control recorded the first onset of swine influenza A, H1N1 in a human. Just one month later, 10 geographically dispersed U.S. states, Mexico and seven European countries had confirmed cases of the same viral infection, and the World Health Organization (WHO) upgraded its pandemic alert to stage 5, just below the stage 6 level that characterizes a full-fledged pandemic. WHO instructed all countries to "immediately activate their pandemic preparedness plans."

In the next few weeks, though the virus continued to leapfrog state and national boundaries, the initial severity began to ebb - and attention began to turn to preparation for the next phase. History has shown that new flu strains can make a mild first appearance only to resurface with a vengeance a few months later; therefore, continuity planning remains critical.

Projections show that a severe flu pandemic could affect 25 to 35% of the population and could negatively affect U.S. GDP by 4 to 4.5% (Even a mild pandemic would have an estimated -1% impact to GDP numbers.) Add to the mix the current global economic crisis, and the potential negative impact becomes far more severe. With temporary workforce reductions running as high as 40% in some pandemic projections, organizations won't be able to just "tough it out"; they will need robust, well thought-out Business Continuity Plans to survive a pandemic.

Prepare for Business Discontinuity

A Business Continuity Plan (BCP) incorporates "disaster event" preparation for all aspects of an organization - people, process and technology - and for all internal and external stakeholders (vendors, customers, partners, etc.). North Highland, a global management and technology consulting firm that has developed such plans, stresses that a strong BCP can:

• Ensure consistent performance of critical business processes throughout the crisis
• Provide stability and confidence to vendors, partners and customers
• Mitigate economic loss throughout the crisis scenario

Scott Hammer, a Principal with North Highland, notes that "even if your organization doesn't have such plans, it's still not too late to determine how a pandemic can affect you. Look at your value chain, decide what critical services your organization must continue to provide during a pandemic, and develop the detailed plans to provide these services. Look beyond IT, where most organizations focus disaster recovery plans, to your operations and business. Your business is where your people are, and that is where a pandemic will have the greatest impact."

"Even though you can never completely mitigate risk," adds Dodge McCord, a Senior Specialist with North Highland, "the right preparation is a roadmap around the panic that invariably accompanies catastrophe. Don't make the mistake of thinking you can just deal with it when it occurs - it'll be too late then."

A focused and deliberate BCP will have an enormous payback when the time comes that it is needed. "In the same way that the young and the elderly are most at risk from influenza itself, organizations that have not planned for business continuity may not survive the economic disruption that a pandemic causes," Hammer notes. "A Business Continuity Plan is a 'flu shot' that organizations can give themselves to help ensure they are among the survivors."

North Highland's example checklist of risk mitigation activities for a large retail organization provides guidance for a wide variety of businesses and includes views into the supply chain, the labor force, customer communication and corporate activities.

Pandemic Preparation Checklist

Suppliers

	Require and review all suppliers' BCPs. Specifically look for plans related to continuity disruptions such as pandemics or large-scale natural disasters.
	Create business continuity preparation toolkits for those suppliers that may not have adequate plans in place or documented.
	Contractually become the preferred customer to your suppliers.
	Identify and establish relationships with alternative suppliers.
	Identify items that may be in high demand during a pandemic (e.g. latex gloves, masks, sanitizers).

Distribution Capabilities

	Develop plans to shift fulfillment between distribution centers.
	Establish contingency contracts with third-party logistics providers.
	Develop a staffing plan to ensure an adequate warehouse and transportation labor force.
	Include CDC guidelines for person-to-person contact in preparation planning and education.
	If an outbreak becomes imminent:
	Increase safety stock on key products. Accelerate shipments to high-volume stores. Implement CDC guidelines for reducing viral transmission- Minimize contact between distribution center employees Minimize contact for truck drivers on their routes

Retail Locations

	Develop a staffing plan to accommodate a reduced labor force – e.g., reduced store hours, regional staffing (should some stores require closing).
	Develop technologies and processes to reduce reliance on personnel.
	Conduct regular education on CDC guidelines for person-to-person contact.
	If an outbreak becomes imminent:
	Implement CDC guidelines for reducing viral transmission. Provide staff with ongoing communication on the status of the pandemic and its effects on operations. Leverage technology capabilities- Increase self-checkout lanes, kiosks and other automated stations. Temporarily suspend any restrictions on credit card-by-phone sales. Use Internet or phone for orders; establish loading centers for drive-through pick-up.

Service Capabilities

	Require and review the BCPs of all installed sales contractors and in-store service providers.
	Develop service capability plans to take product to the consumer (i.e., train additional employees in home delivery (obtain commercial drivers licenses if necessary) and extend delivery hours to accommodate increased volume)
	If an outbreak becomes imminent:
	Limit routine service and reduce or suspend special projects, resets, and re-merchandising activities.

Customer-Facing Communications

	Develop a campaign to educate customers on your preparedness to serve them and limit exposure.
	Publicize donations and support for healthcare providers and key public services.
	Participate in government and professional association planning initiatives.
	If an outbreak becomes imminent:
	Provide proactive information and links to government sites on your Web home page. Distribute in-store literature and mailings (e-mail or U.S. mail) to entire customer database. Push information to all publications and media with information about your preparedness. Implement targeted advertising around your Web site, home delivery, in-store pickup and key products.

Corporate

	Develop Crisis Management Plan (communications, team members/roles, processes).
	Determine critical roles to support core business functions and develop staffing plans.
	Create plans and capabilities for employees to work from home, limit meetings and encourage teleconferences.
	Develop scripts and training for contact center employees to handle increased call volume.
	Prepare for an increased volume on your Web site.
	Harden key IT systems to handle the additional loads on VPN, Internet and intranet.
	If an outbreak becomes imminent:
	Activate your Crisis Management team and plan. Over-communicate to your staff the status of the pandemic and its effects on your business. Push out preparedness press releases targeted towards your investors, business partners and customers.

Tim Gunter and Karl Nebel, vice presidents at North Highland, have handled business continuity and disaster recovery planning for Fortune 1000 companies and smaller organizations. For more information, contact Karl Nebel.