Murray Jack: Best be prepared, the only motto for bird flu

The threat of an influenza pandemic is real, and inevitable, say infectious diseases experts at the United States Department of Health and Human Services, the WHO and other respected agencies.

Human casualty rates have so far been relatively small but when they are infected, the H5N1 avian flu strain seems uncommonly lethal.

Public awareness is rising but there is a fine line between prudent preparedness and panic.

At present, the H5N1 virus is not transferable between humans and there is no certainty it will become so. Agencies have stepped up their monitoring systems in an effort to provide a chance to contain any outbreak. It is not at all certain that any bird flu pandemic today will play out in the same way it did in 1918.

Based on the preparedness activities implemented by New Zealand Government agencies (which include the release of an influenza pandemic business planning tool kit by the Economic Development and Health ministries), the Government is also taking this threat seriously.

It considers its preparedness response will help to mitigate the costs in terms of the possible impact on the economy and the 33,000 estimated human casualties.

But there is growing concern that businesses are giving the influenza pandemic scenario a good dose of unhelpful scepticism and cynicism (possibly influenced by an uneventful Y2k), and that a corresponding lack of private sector preparedness could lead to many incurring avoidable losses if it occurs.

This poses the question - should business leaders be doing more to counter this threat?

The efficacy of crisis management and continuity plans is unlikely to be on the agenda of most business leaders if an influenza pandemic is the only threat. There seems, though, to be an ever-increasing variety of threats to business resilience around the world: the September 11, London, New Delhi and Bali bombings, Sars, the tsunami, earthquakes in Pakistan and the US hurricanes.

There is no reason to panic, but the risk of a pandemic scenario rapidly taking hold seems to increase the stakes. New Zealand's borders might afford some protection, but once a pandemic occurs here or elsewhere, the economic impact and cost to local businesses will be high.

It would be prudent for boards and managers to take stock of their risk management strategies in order to minimise any avoidable loss.

The severity of the next pandemic cannot be predicted with certainty, but modelling studies suggest its effect could be severe and private businesses will bear the brunt of the burden if an influenza outbreak is of significant size or duration.

This is because business depends on the health of its employees, its suppliers and its customers.

If these are compromised, business would be severely impacted by lost productivity, lost sales, human resource casualties and health-care costs. Some large corporates could be out of pocket by millions of dollars and cashflow will be tight as customers delay, defer or stop transacting.

Not only does a pandemic represent a growing threat to our personal well-being, but the economic impact on businesses of such a crisis can also be serious and long term.

The Government can help by providing legislative relief around sick pay provisions and working with the Reserve Bank to maintain liquidity. Without these kinds of measures, many small businesses may not survive.

An influenza pandemic or something similar would hit this country's 300,000 small to medium businesses (SMEs) the hardest. In many cases, SME businesses are highly dependent on the owner-manager and a small team's ability and willingness to work.

The Government's planning tool kit is a useful planning resource for these companies, but there is still the need for employers to decide what form their financial and operational risk management should take.

Many larger businesses should already have reasonably robust business continuity management plans which integrate crisis management.

These plans should take into account an influenza pandemic scenario just as they consider the risk of a fire, earthquake or tsunami and they will also need to emphasise the importance of individual preparedness and the responsibility for personal hygiene.

Going from general awareness to business preparedness is a big step for some and many businesses have risk management plans that are a little dusty.

It is essential that large corporates and SMEs assess the cost to their business of a pandemic-like situation impacting for a period of six to eight weeks and consider options to mitigate avoidable costs and the benefits of meeting appropriate good employer expectations, let alone obligations.

From a business perspective, the goals of influenza pandemic planning and preparedness, are fourfold:

* Businesses should aim to protect their primary and secondary revenue streams; the products and/or services they sell and their ability to sell them.

* Businesses should aim to protect their employees. Employees are a critical resource to business and when they do not work or work inefficiently or ineffectively, business losses are incurred.

* Businesses should aim to protect their clients and strategic partners. Strategic partners of note might include suppliers, manufacturers, distributors and regulators.

* Businesses should aim to protect their employees' families to reduce revenue lost because of leave taken to care for a sick family member and insurance costs for self-insured employers.

If a company can ensure that it is prepared to meet these obligations, it will be in a strong position to reduce the severe loss that a pandemic or other major catastrophe can potentially cause.

What can business change or do better?

* Align business preparedness measures with the Ministry of Health's Alert Code phases of white, yellow, red and green to be consistent with trigger and escalation points.

* Recognise that the business continuity management plan is only a tool - the quality of the planning process determines the optimum preparedness response.

* Ensure clear and strong leadership and ownership (it's a team effort).

* Update or undertake the business impact assessment that covers the scenario and its impact on people, services/processes and customers to identify mission critical services and recovery optimums.

* Update financial contingency plans, corporate travel policy and insurance, staff (health) policy and repatriation of overseas staff.

* Ensure adequate staff communication around the importance of personal preparedness.

* Undertake ongoing surveillance and monitoring of the health risk through public health agencies, recognising it is a dynamic issue.

* Murray Jack is the CEO of Deloitte.