How do you plan for a nightmare?
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Businesses ponder how to operate in case of bird flu pandemic
By Jonathan Epstein NEWS BUSINESS REPORTER
Updated: 10/07/07 7:37 AM
When Patricia Buckley came to work on Monday, her company was in crisis mode. About 90 people were out sick or caring for family members — nearly half of the work force — so she and her team mobilized fast.
Just two weeks earlier, a global bird flu pandemic had struck several U.S. cities and swept quickly across the country, overwhelming emergency rooms.
Nationwide, half of U.S. workers were ill or otherwise not at work. Full distribution of a vaccine was three months away.
Mail delivery was down to once a week. Two-hour rolling blackouts and brownouts were common as demand surged and repairs could not be made.
The supply of goods was falling, and some businesses had either closed or were being run from homes. And the crisis was hammering Buckley’s company, Merchants Mutual Insurance Co., along with its customers and independent agents.
But Buckley couldn’t just hide from the illness at home. As part of Merchants’ disaster response team, the director of information technology operations had to make sure the company still had enough staff to function, run its operations and meet its customers’ needs — including handling telephone calls and insurance claims.
“If it gets a lot worse, it’s going to get a lot worse throughout the entire United States,” she said. “A disaster that affects only our company, we’re very confident in our ability to recover. This is far-reaching. It’s making us think.” Wait. Stop. Relax.
This scenario is just an emergency planning exercise. There’s no pandemic and the avian flu hasn’t spread in large numbers to humans.
But public health officials around the world aren’t waiting for that to happen. And at their prodding, neither is corporate America. They’re preparing now, just in case their worst nightmare comes true.
“My hope is that these businesses don’t ignore this and then it becomes a problem of government to try to fix their problem in retrospect,” said Dr. Anthony J. Billittier IV, Erie County health commissioner. “Government won’t be able to do it. Look at Katrina.”
From insurers and banks to grocery store chains like Wegmans, companies large and small nationwide are developing “contingency” plans to deal with a range of possible effects of a widespread flu pandemic.
The H5N1 virus has already spread rapidly among bird populations in Asia, Europe and Africa, and infected more than 329 people in 12 countries, killing 201, according to the World Health Organization. The virus has not yet shown the ability to jump from person to person, but experts who have been monitoring it for eight years say that’s just a matter of time.
It wouldn’t be the first. In 1918, the “Spanish flu” pandemic killed an estimated 40 million people worldwide. Two other pandemics in 1957 and 1968 also caused significant deaths but not to the same degree.
The impact of a new pandemic on society and the economy could be severe. A report this year by Trust for America’s Health said a severe pandemic could lead to the second-worst U.S. recession since World War II. New York state’s economy alone could lose $50 billion.
So businesses are taking precautions, especially if they operate globally. They’re looking at how to cope with the loss of a major portion of staff, how to contain the disease, how to keep operations running, and how to serve customers.
“A bank of the size and complexity of HSBC has to have in place detailed plans to deal with any possible threat to its business,” said Francine Minadeo, spokeswoman for HSBC Bank USA, whose London-based parent is stockpiling drugs.
They’re also exploring every possible secondary disaster scenario, from fixing computer problems when the tech guy is sick to maintaining food deliveries into a building.
“M&T, like any organization, is aware of the fact that the possibility of a pandemic exists. So we prepare for it just like any other event that could happen,” said Jeff Shaw, information security compliance administrator, who manages M&T Bank Corp.’s business continuity effort. “It’s just being prudent.”
The financial services industry is among the most advanced in planning, because it’s highly regulated and those regulators want to ensure the nation’s financial system remains intact. Banks and insurers must have “business continuity” plans in place for a wide range of emergencies, and must test them and update them to ensure they would work. The flu efforts have been under way for two years, since November 2005.
“Bank of America actively tests business preparedness plans, processes and back up operations,” spokeswoman Kelly Sapp said by e-mail. “We continue to use simulations and other measures . . . to prepare for all types of scenarios.”
“We have a responsibility to our customers and our franchise and our employees to make sure that we have a healthy work environment and can meet our customers’ needs,” said Greg Gist, senior vice president in Citigroup’s Corporate Office of Business Continuity. “The risk of not being prepared, to me, carries 10 times more the consequences than the risk of being [overly] prepared.”
That’s why more than 2,725 banks, insurers and brokerage firms around the country — including Merchants, M&T, Bank of America and Citi — are currently participating in a threeweek exercise aimed at testing disaster plans in the event of a pandemic. The test began Sept. 24, and ends Thursday.
The exercise — the largest ever of this type in the United States — is designed to simulate as best as possible the conditions that companies would face when the virus hits America. That’s based on the estimates and predictions of scientists and medical researchers at Centers for Disease Control and the World Health Organization.
It’s sponsored by the U.S. Department of the Treasury and the Securities Industry and Financial Markets Association.
At its core, the test expects about 25 percent of a company’s staff to be absent the first week, and almost half the second.
It then presents a series of changing conditions affecting travel, the stock market, and other factors, and poses an array of specific worst-case scenarios to see whether the companies have a plan, and how they would respond.
“What we’re trying to do is recreate as much as we can what would happen should a pandemic eventually reach America,” said Louis W. Pietroluongo, deputy New York state In two incidents last month of avian influenza infecting chickens: at left, a worker disinfects a poultry truck near Nuremberg, Germany; at right, a health official throws an infected bird into a fire pit in Surabaya, Indonesia.
superintendent of insurance for disaster preparedness and business continuity planning. “We can’t explore all of these things, but what we’re trying to do is come down the middle of the road.”
Merchants even added its own twist, creating an additional problem involving its own personnel or equipment each day for team members to solve.
“We thought it might be interesting to put the immediate spin on it,” Merchants spokeswoman Lisa Wishman said. “It’s an eye-opening exercise.”
Many businesses have long had contingency plans and emergency response teams in place should a particular bank branch, office building, store, operations facility, city or entire region be affected by a disaster.
The goal is to make sure the business can operate through the event, without impeding customers and without losing any records or information.
In the past, companies prepared for hurricanes, tornados, floods, earthquakes, blizzards, fires or other natural disasters, as well as for events such as blackouts that could be unrelated to weather. More recently, they’ve added terrorism events like “dirty bombs” to the list, especially in high-profile areas.
But preparing for a worldwide flu pandemic is much different. Rather than affecting just a limited geographic area or even a single building, a pandemic would hit the entire country. And it would last for 12 to 18 months, in multiple waves, instead of a few minutes or hours.
“Very few companies if any have ever planned for something like this,” Gist said. “Most companies are using this as an opportunity to take their planning to a new level of maturity. There is no one silver bullet.”
First, companies are prioritizing their work and learning what resources are available to them. Many would transfer work from one operations center to another that wasn’t hit as hard, or even to another department within the same facility.
“The projected waves of a pandemic may be regional in nature or affect only a limited area,” Karen Merkel-Liberatore, spokesman for Buffalo-based HealthNow New York.
Employees also are being actively cross-trained in multiple functions, and companies are identifying key people to fill critical roles. And significant work is already automated.
Many companies like M&T, Citi and KeyBank are considering whether employees can do work from home to avoid exposure, and are assessing whether they have enough Internet “bandwidth” to handle such an increase in Web traffic. Indeed, that’s become a major question.
“It’s such a great unknown,” said M&T’s Shaw. “We’ve never pushed the limit of the Internet to this point where we know what this would do to us.”
KeyBank officials are looking at whether they could handle more activity through call centers, online banking, and ATMs, since many routine activities can be done remotely, said spokesman William Murschel.
Billittier said some banks have talked of closing branch lobbies to minimize physical contact.
And Citi is making sure its human resources policies consider “situations that we haven’t thought of before,” Gist said, such as the need for a single parent to stay home with children if schools are closed.
Pietrolongo said companies also need to maintain building security to keep sick people from coming to work, and might need to provide cafeteria service around the clock. And they have to consider the psychological impact on workers.
“You’re going to have a lot of people dying. It’s a human scenario,” he said.
HSBC, with its global reach in 83 countries and territories, has gone a step further. After seeking advice from leading experts on avian flu, the company is purchasing and stockpiling the anti-viral drug Tamiflu that has been recommended by the World Health Organization. The drug would be available to all employees and, where possible, could be purchased for their family members.
“This risk is very much a people issue and therefore we have planned with the protection of our employees and their families, and our customers, in mind,” Minadeo said by e-mail.
Still, many nonfinancial businesses are betting against an outbreak. And that concerns experts like Billittier.
“It’s important that they have some sort of planning. There’s so many things that we’re vulnerable to,” he said. “It’s not just about pandemic flu.”
