Most health experts now think the occurrence of an influenza pandemic is a question not of if but when. Were a pandemic to occur, it would prove devastating to the national economy and individual businesses. But although just about all companies prepare for fires, only a handful prepare for pandemics-even though, statistically, a workplace is more likely to experience a pandemic than a fire. So how do you convince senior management to invest in influenza pandemic planning?

The Risk of Pandemic

A pandemic is a large-scale outbreak of a highly infectious illness to which few, if any, people are immunologically resistant. An influenza pandemic is expected to be significantly worse than the SARS-type epidemic that hit Canada a few years ago in terms of both health and economic impacts, such as worker absenteeism rates. And the SARS outbreak in Canada resulted in a $2 billion loss to the economy. So you can imagine the possible impact an influenza pandemic would have on the country's economy-and your company's finances.

A pandemic would likely cause severe disruption to a company's labor supply. Some experts have estimated that during an influenza pandemic's peak, companies would experience absentee rates of between 15% and 30% due to sickness, quarantine, travel restrictions, family care obligations and fear of contagion.

Why Companies Don't Plan for Pandemics

Given the likelihood that an influenza pandemic will happen and the severe economic impact it would likely have, you'd think that companies would be investing in pandemic preparedness, much like they invest in, say, fire preparedness. Moreover, many companies have experience in planning for various types of disruptions to their supply of power (such as the 2003 ice storm in Central Canada), information technology (such as Y2K) and hardware and materials (as in 9/11 and Katrina).

But for some reason, companies don't seem to be taking the threat of an influenza pandemic as seriously as other threats to their business. Why aren't companies planning for this potential disruption to their labor supply the same way they do for disruptions to other supplies?

A recent study by a researcher from the Schulich School of Business in Toronto poses several theories. One is that managers are making the assumption that their entire industry would suffer equally and thus no competitor would get an advantage over others in the event of a pandemic. But that assumption may be wrong. Many companies have, in fact, prepared for a pandemic. For example, Alcan and Sunoco have posted their pandemic preparedness plans on their corporate websites.

Managers may also underestimate the probability that a pandemic will happen. But experts have calculated the cumulative probability of an influenza pandemic over time as in the range of:

• 3-10% for 2008;
• 14-41% by 2012; and
• 26-65% by 2017.

A final theory is that executives are underestimating the impact an influenza pandemic would have on the company's bottom line. Studies have been done on the economic impact of a pandemic on a "macro" level-that is, on the overall economy. For example, one expert estimates that a mild pandemic would shrink Canada's Gross Domestic Product (GDP) by 2%, while a severe pandemic would shrink the GDP by up to 6%. But no studies had been done on the economic impact of a pandemic on a "micro" level-that is, on individual companies' finances. And the lack of data of the potential impact of a pandemic on an individual company has made it harder for safety coordinators to build a compelling business case for pandemic preparedness.

Conclusion

That's where the Schulich study comes in handy. Next week, we'll look at the study and how to use it to build a solid business case for investing in pandemic planning.

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