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Source: http://www.economist.com/business/di...ry_id=13600854
Business.view
Assuming the worst
May 5th 2009
From Economist.com
How firms' disaster plans may fail in a pandemic
THE parallels are eerie. A few people in a poor country start showing symptoms of a strange disease. Then clusters start popping up around the world, each connected to the starting point by a long, thin line traced through the air at 30,000 feet. Soon more clusters of disease start appearing, suggesting it is spreading easily from person to person. The World Health Organisation sounds the alert.
Switch swine flu for bird flu and Mexico for Thailand and events of the past week or so will be familiar to the 3,500 people who played an extraordinary ?game? in 2006 to test the resilience of Britain?s banking system to a pandemic. Thankfully, swine flu shows every sign of being mild and susceptible to antiviral medicines. But the results of the British planning exercise provided a foretaste of what businesses may face in a second wave of infection if the flu mutated to become drug resistant or more virulent.
The drill was thought to have been the largest and longest of its kind. It involved 70 organisations and lasted six weeks, while simulating the passage of around five months. It found weaknesses in almost all the disaster plans drawn up by financial firms since the attacks of September 11th 2001 and highlighted the fragility of today?s highly networked society.
Business-continuity planning has become standard in big firms in recent years. But most plans are designed to deal with short-term events such as hurricanes or terrorist attacks. Preparation for these sorts of emergency can be fairly straightforward: arranging office space in case the usual workplace becomes unusable; having backup computer facilities in case the main ones are hit; and installing software that lets staff work from home.
Much as these preparations are an improvement over a decade ago, when few firms outside the hurricane belt were prepared for even minor disruptions, they still have failings. A study published in 2005 by the Bank of England, the Financial Services Authority and the Treasury found that almost half of the sites that the British banking industry depends on were within ten kilometres (six miles) of the Bank of England. Many of the banks? backup sites were within the same radius. Thus a single catastrophe, such as a dirty bomb, in the middle of London could have crippled the banking system. Much has been improved since then but preparing for a pandemic is yet another order of magnitude harder and costlier.
The first problem would be a lack of staff. Britain?s official pandemic plan, for instance, assumes that almost half of employees will take up to two weeks off work. Arranging for people to work from home, the first response of many organisations, may not help. In the London banks? drill many found that they were unable to monitor their traders (to prevent insider trading, for instance) and thus insisted on them coming to the office. A lot of people working from home could also overload telephone and broadband networks, especially if these were not being properly maintained because the networks? engineers were off work, too.
Many employees in the drills also said they got little work done at home, partly because they ended up being sucked into domestic chores such as looking after children. This is something few firms had previously thought about but which should be central to pandemic plans because closing schools would be one of the authorities? first steps.
Harder still is preparing firms to cope with the death of many key employees. Armies are among the few organisations designed from scratch to continue functioning despite casualties. Their answer is overstaffing and training each person to do many jobs; if the platoon leader gets shot his sergeant can take over. Yet no business can justify the expense of training every employee to step into the shoes of his boss.
So, many companies seek to identify essential employees and protect them with antivirals like Tamiflu, an approach encouraged by some countries such as America, which suggests that firms stockpile drugs. However, notes Richard Coker, a professor of public health at the London School of Hygiene and Tropical Medicine, other countries?including France?ban private hoarding of antivirals, arguing that the government should allocate these scarce resources.
Yet even where firms do try to protect vital staff, demand might swamp supply. America?s Department of Health reckons that more than 100m courses of medication would be needed to protect front-line health-care staff. Keeping the lights on will be equally difficult. America?s National Infrastructure Advisory Council says that of the 70m people employed by firms providing services such as water, electricity and telecommunications, some 4m-8m are essential to keep them going in an emergency.
Providing prophylactic antiviral medicines to just these key people during an outbreak would require as many as 64m courses of medication. Human factors compound this, too: how would firms ensure that essential employees were taking their medicine instead of smuggling it home to give to ill children or spouses? How would they cope with the anger of those staff judged as expendable?
Worryingly, only half of companies (mostly large ones) in Britain have drawn up plans for all this. Of these, only a minority have looked into whether their most important suppliers have done the same. ?Everyone?s planning assumes that the electricity supply will be fine, that fuel will delivered, that the ports will be open,? says Dr Coker, who conducted a study last year on pandemic preparedness among firms. ?But in a just-in-time economy, making sure that none of the linkages break will be enormously challenging.?
Most firms thought about many of these issues for the first time when Severe Acute Respiratory Syndrome (SARS) struck Asia in 2003. That disease, which although dangerous to those who caught it turned out not to spread as easily as had been feared, provided a dry run to prepare the world for a more serious pandemic. Yet recent surveys show that the false alarm over SARS and the subsequent one over bird flu instead encouraged some firms to lower their guard. If there is now a lull in the present outbreak, as looks likely, it should be seized as a chance to get ready for when swine flu?or something worse?strikes again.
Business.view
Assuming the worst
May 5th 2009
From Economist.com
How firms' disaster plans may fail in a pandemic
THE parallels are eerie. A few people in a poor country start showing symptoms of a strange disease. Then clusters start popping up around the world, each connected to the starting point by a long, thin line traced through the air at 30,000 feet. Soon more clusters of disease start appearing, suggesting it is spreading easily from person to person. The World Health Organisation sounds the alert.
Switch swine flu for bird flu and Mexico for Thailand and events of the past week or so will be familiar to the 3,500 people who played an extraordinary ?game? in 2006 to test the resilience of Britain?s banking system to a pandemic. Thankfully, swine flu shows every sign of being mild and susceptible to antiviral medicines. But the results of the British planning exercise provided a foretaste of what businesses may face in a second wave of infection if the flu mutated to become drug resistant or more virulent.
The drill was thought to have been the largest and longest of its kind. It involved 70 organisations and lasted six weeks, while simulating the passage of around five months. It found weaknesses in almost all the disaster plans drawn up by financial firms since the attacks of September 11th 2001 and highlighted the fragility of today?s highly networked society.
Business-continuity planning has become standard in big firms in recent years. But most plans are designed to deal with short-term events such as hurricanes or terrorist attacks. Preparation for these sorts of emergency can be fairly straightforward: arranging office space in case the usual workplace becomes unusable; having backup computer facilities in case the main ones are hit; and installing software that lets staff work from home.
Much as these preparations are an improvement over a decade ago, when few firms outside the hurricane belt were prepared for even minor disruptions, they still have failings. A study published in 2005 by the Bank of England, the Financial Services Authority and the Treasury found that almost half of the sites that the British banking industry depends on were within ten kilometres (six miles) of the Bank of England. Many of the banks? backup sites were within the same radius. Thus a single catastrophe, such as a dirty bomb, in the middle of London could have crippled the banking system. Much has been improved since then but preparing for a pandemic is yet another order of magnitude harder and costlier.
The first problem would be a lack of staff. Britain?s official pandemic plan, for instance, assumes that almost half of employees will take up to two weeks off work. Arranging for people to work from home, the first response of many organisations, may not help. In the London banks? drill many found that they were unable to monitor their traders (to prevent insider trading, for instance) and thus insisted on them coming to the office. A lot of people working from home could also overload telephone and broadband networks, especially if these were not being properly maintained because the networks? engineers were off work, too.
Many employees in the drills also said they got little work done at home, partly because they ended up being sucked into domestic chores such as looking after children. This is something few firms had previously thought about but which should be central to pandemic plans because closing schools would be one of the authorities? first steps.
Harder still is preparing firms to cope with the death of many key employees. Armies are among the few organisations designed from scratch to continue functioning despite casualties. Their answer is overstaffing and training each person to do many jobs; if the platoon leader gets shot his sergeant can take over. Yet no business can justify the expense of training every employee to step into the shoes of his boss.
So, many companies seek to identify essential employees and protect them with antivirals like Tamiflu, an approach encouraged by some countries such as America, which suggests that firms stockpile drugs. However, notes Richard Coker, a professor of public health at the London School of Hygiene and Tropical Medicine, other countries?including France?ban private hoarding of antivirals, arguing that the government should allocate these scarce resources.
Yet even where firms do try to protect vital staff, demand might swamp supply. America?s Department of Health reckons that more than 100m courses of medication would be needed to protect front-line health-care staff. Keeping the lights on will be equally difficult. America?s National Infrastructure Advisory Council says that of the 70m people employed by firms providing services such as water, electricity and telecommunications, some 4m-8m are essential to keep them going in an emergency.
Providing prophylactic antiviral medicines to just these key people during an outbreak would require as many as 64m courses of medication. Human factors compound this, too: how would firms ensure that essential employees were taking their medicine instead of smuggling it home to give to ill children or spouses? How would they cope with the anger of those staff judged as expendable?
Worryingly, only half of companies (mostly large ones) in Britain have drawn up plans for all this. Of these, only a minority have looked into whether their most important suppliers have done the same. ?Everyone?s planning assumes that the electricity supply will be fine, that fuel will delivered, that the ports will be open,? says Dr Coker, who conducted a study last year on pandemic preparedness among firms. ?But in a just-in-time economy, making sure that none of the linkages break will be enormously challenging.?
Most firms thought about many of these issues for the first time when Severe Acute Respiratory Syndrome (SARS) struck Asia in 2003. That disease, which although dangerous to those who caught it turned out not to spread as easily as had been feared, provided a dry run to prepare the world for a more serious pandemic. Yet recent surveys show that the false alarm over SARS and the subsequent one over bird flu instead encouraged some firms to lower their guard. If there is now a lull in the present outbreak, as looks likely, it should be seized as a chance to get ready for when swine flu?or something worse?strikes again.
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