ARE YOU READY YET?

by Robert N. Charette, Fellow and Director, Enterprise Risk Management & Governance Practice, Cutter Consortium

On 3 August, US Senate Majority Leader Bill Frist (R-Tenn) called for a Manhattan Project for the 21st Century to attack infectious disease and bioterrorism. Frist, who is not only a US senator but also a physician, said that the US is, "unprepared for rampant epidemics." Furthermore, he stated that, "The evidence suggests that we could be at the threshold of a major shift in the antigenicity of not merely one but several categories of pathogens -- for rarely, if ever, have we observed among them such variety, richness, opportunities for combination, and alacrity to combine and mutate."

On 29 September, the World Health Organization (WHO) warned that for planning purposes, countries should prepare for a death toll of 7.4 million people from a new influenza pandemic if the H5N1 bird flu strain mutates. This is toward the low end of a possible 150 million deaths if the worst-case scenario occurs. For planning purposes, US health officials expect some 200,000 deaths as a "best case" scenario if a deadly flu pandemic hits.

Also on the 29th, the US senate approved US $4 billion to buy stockpiles of flu antiviral drugs (although some senators are trying to kill the legislation). Currently, the US has stockpiled two million doses, which are meant to cover "first responders" to a flu pandemic. The goal is to purchase an additional 150 million doses, although it is unclear that pharmaceutical companies could produce that many doses in a short time frame, especially given that the US is at the back of the line in terms of ordering these drugs. Over 30 countries have already placed orders for antiviral drugs, and there is a very limited number of companies that can produce them.

On 5 October, scientists announced that they had been able to recreate the strain of the 1918-1919 pandemic flu, which had killed 50 million people. It shared many characteristics of the current H5N1 bird flu strain -- a worrying discovery.

On 13 October, it was confirmed that the bird flu had reached Europe. The H5N1 flu virus was found in Turkey, a few days later in Romania, and on 17 October in Greece. British health officials announced they expected it to appear in England within the next few months.

For the past couple of years, I have been writing about the need for companies to update their business continuity management (BCM) plans to deal with the possibility of an influenza or other type of viral pandemic (see " Pay Me Now or Pay Me Later," 23 April 2003, " Dodging Bullets -- So Far," 26 February 2004, and " Is Your BCM Plan Pandemic Ready?" 16 December 2004). My informal poll of companies indicates that most companies have ignored the issue over the past couple of years.

Interestingly, I have heard reports that some of these companies are now including flu pandemics as an item that needs monitoring on their enterprise risk management watch list. One reason is that Asian companies that are US suppliers are stepping up their own plans to deal with a possible pandemic. For intance, many are installing monitoring devices to check their employees for signs of fever.

Several companies I am familiar with, especially those with overseas operations or dependent on overseas suppliers, are also starting to create BCM plans to deal with such a pandemic. One company I know, which has overseas operations or suppliers in over 25 countries, has made it a priority item of executive management concern.

I think this is very wise. The federal response to a pandemic situation is untested. The federal response to the recent hurricanes doesn't fill me with confidence. Health and Human Services Secretary Michael O. Leavitt admitted that the US was woefully unprepared for a pandemic, and that the draft plans created last year to deal with a pandemic are just being finalized. Only six states appear to be in any position to deal with a pandemic, and the federal approach seems to rely greatly on local control of a pandemic situation as much as possible.

A primary governmental response to a pandemic will likely be the mandatory quarantine of those suspected of being infected. On 1 April, President Bush amended Executive Order 13295, which added to the list of quarantinable diseases influenza caused by novel or reemergent influenza viruses that are causing, or have the potential to cause, a pandemic. A few weeks ago, President Bush said he was considering the use of the US military to help quarantine parts of the US if there is a pandemic outbreak. A debate is now raging on whether it is possible or even desirable to impose a quarantine (e.g., it is thought by some scientists that quarantines actually increase the deadliness of a flu strain). Nevertheless, businesses need to understand that if a pandemic strikes in their area or in their suppliers' country, their workers or their families are likely to be sent and kept at home. Even if a quarantine does not happen, how is a business to operate if a large proportion of its workers are laid up at home sick?

Further complicating matters are two recent studies published in the British medical journal The Lancet, which have shown that flu shots are not as effective as initially believed. One study showed that flu shots have only a modest effect on preventing flu in the elderly, while the other shows that influenza strains, especially those related to bird flu, are becoming resistant to the only cheap antiviral influenza drug. These two studies have caused a stir in medical circles, and have implications on the effectiveness of governmental plans such as stockpiling antiviral drugs to address a pandemic.

Of particular worry is a pandemic hitting this year. Flu could spread very quickly and the US death toll could rise very quickly given the number of people living in shelters across the US due to the effects of hurricanes Katrina and Rita. Shelters can be prime breeding grounds for infectious disease. The US Centers for Disease Control (CDC) is already monitoring the gulf coast region for any disease outbreaks.

Almost everyone is in agreement that the question is not if an influenza pandemic is going to hit, but when. Flu pandemics occur in 30- to 40-year cycles, and we are past due on one. While health officials point out that it is unlikely that a bird flu pandemic will hit this year, the fact that the flu strain is now spreading around the world increases its likelihood of mutating into a deadly form.

Given this situation, there is no reason for any company or organization to be taken by surprise by a pandemic, yet many undoubtedly will be. So, the question I put to you is: are you or your organization's BCM plan ready for a pandemic yet? And if your answer is no, I can then safely assume that your organization is prepared for the lawsuits from investors and possibly its own employees that will inevitably come for being so unprepared after such a pandemic hits.

-- Robert N. Charette, Fellow and Director, Enterprise Risk Management & Governance Practice, Cutter Consortium