By: Sharda Prashad

May 21, 2006, Toronto Star

Dr. Michael Gardam was working when the blackout hit in 2003. He didn't know how long the generators at the hospital would work before needing more diesel. He did know that if the generators stopped, ventilators would stop and patients would die. Since the hospital was on a just-in-time delivery system when it came to food and supplies, Gardam also wondered what the hospital would do if the suppliers couldn't get there. Within 24 hours, the hospital had used up most of its food supplies.

A doctor at the University Health Network and its director of infection prevention and control unit, Gardam became a point person when SARS hit in 2003. He saw the fear in both patients and staff, quickly recognizing the benefits of open and transparent communication. He also believed it would be best to train staff on new equipment and new procedures before a crisis occurred rather than while one was unfolding.

Having lived and worked through both crises informs Gardam as he plans for a possible avian flu pandemic. Gardam wears many hats, helping the province, the teaching hospitals affiliated with the University of Toronto and his own hospital institute pandemic preparedness plans.

A pandemic would pose risks and opportunities not just for those in health care, but also for businesses across sectors.

While studies have found that businesses in countries that experienced SARS are more prepared for a pandemic than those not affected, one of the biggest problems for businesses now is how much to prepare.

The H5N1 avian flu virus has killed at least 122 people since 2003 but, to date, the virus has mostly spread from bird to bird and bird to human. It has yet to mutate into a form that's highly infectious to humans. There's no certainty that it will, but most experts believe it will.

The World Health Organization estimates between 2 million and 7.4 million people could die. Worst-case estimates by other experts say about 30 per cent of the global population could be struck and 150 million could die.

Sheela Basrur, Ontario's chief medical officer, has estimated that between 15 and 35 per cent of Ontario's population could be affected and between 2,900 and 19,700 people could die.

So what should companies do?

"There's planning and there's nutty planning," says Gardam. "If you type 'bird flu' into Google, oh my God, some of what you're getting is weird. They're preying on people's fears."

It's a situation that's reminiscent of the run-up to Y2K, when consultants were flogging services at increasingly high rates to avert the chaos that was predicted to occur - but never did - when the new millennium arrived.

Fast forward to 2006 and regulators such as the Office of the Superintendent of Financial Institutions Canada (OSFI).

The regulator for more than 450 financial institutions in Canada, OSFI has issued a statement saying it expects "financial institutions in Canada to consider how adequate their business continuity plans are for dealing with a potential pandemic." OSFI hasn't issued a similar warning since Y2K.

Rather than getting caught in the frenzy of pandemic preparedness as some companies did with Y2K, Gardam says common sense should be used. A plan should include: staff coverage for those who are sick; stockpiling necessary supplies; and deciding which services will be cut back to create capacity for those that will be in demand.

Other considerations should include: implementing policies and technology that allow people to work from home; introducing health-care procedures that prevent a virus from spreading at work; anticipating difficulties staff, clients and vendors would have travelling; and anticipating other supply chain problems.

Preparing for a possible pandemic is different from traditional crises businesses may have planned for in the past, Dr. Jeffrey Staples notes in the current issue of the Harvard Business Review.

A pandemic would not be localized in the way fires, bombs, riots and other crises would be, and it would affect more than a company's infrastructure. A pandemic also is not an isolated event that would occur over a specific time frame as other crises tend to be.

Companies that have a flatter, more decentralized organizational structure, where staff are cross-trained and leadership is shared, would be better equipped to deal with a pandemic than one with a top-down hierarchy where leadership is centralized, writes Nitin Nohra, Harvard Business School business administration professor in the current HBR. In the event of a pandemic, an organization's plan has to allow for staff to be poised to adapt as events unfold.

The World Bank estimates a human influenza pandemic would have a global economic impact of $800 billion (U.S.). By comparison, SARS in 2003 cost Asian Pacific economies $40 billion. (The cost to Ontario's tourism industry alone has been estimated at about $2 billion Canadian.) The International Monetary Fund has said the biggest impact on the workplace would be high absenteeism.

A study of businesses around the globe, released by Mercer Human Resource Consulting this spring, found 47 per cent of respondents have a business continuity plan in place.

A spokesperson for Mercer said the company has noticed a moderate increase in demand for consulting services. Other consulting companies, such as Booz Allen Hamilton, have noted similar increases in demand for pandemic preparedness services.

International SOS is one of the largest companies offering such consulting services around the world. Companies with operations in Asia have been particularly diligent about pandemic preparedness, says Tim Daniel, chief operating officer.

Costs for such planning are wide-ranging. For $5,000 (U.S.), companies receive a 130-page textbook, weekly email updates and access to updates on the company's websites. Alternatively, a large global company could hire International SOS for $40,000 a month, which would include communications and planning, among other things. But for most companies, something between these two extremes would more than adequate, says the company. Over the past eight months, more than 200 clients have sought pandemic preparedness help.

The Mercer spokesperson wouldn't say how much these plans cost to implement, but did say the more rushed the plans are, the more expensive they will be.

One of the biggest beneficiaries of pandemic preparation has been Roche Laboratories Inc., the manufacturer of the anti-viral Tamiflu. Since 2002, Roche has expanded capacity from 5.5 million units of the drug to 190 million units. It expects to more than double that by 2007. About half of the orders have come from governments stockpiling the drug as part of their own preparedness planning, according to a report by Citigroup released this spring. Canada, for example, is expected to stockpile orders of Tamilflu to cover 17 per cent of the population. Last year, Roche recorded $1.56 billion in global sales of Tamiflu, with pandemic stockpiling by governments around the world accounting for $790 million.

If a pandemic did occur, other pharmaceutical companies would benefit, as would private hospital chains, cleaning product makers, home entertainment providers and Internet technology companies, according to the Citigroup report. Companies that would be hit hardest would include those in the airline, hotel and luxury goods sectors, according to the report.

A pandemic could also devastate the insurance industry. "A severe outbreak could have far-reaching repercussions for a large number of life insurers," Nigel Dally, a Morgan Stanley insurance analyst, wrote in a recent report after studying 14 public companies.

MetLife Inc. and some smaller firms could be expected to be most exposed to losses based on the amount of life insurance they have underwritten. The Insurance Information Institute estimates that if a pandemic were as severe as the 1918 Spanish flu, it would cost $133 billion in additional death claims, more than half the industry's $238 billion capitalization.

A study released by Fitch Ratings this spring estimated that U.S. and European life insurance claims payouts would increase by more than $50 billion in a pandemic where 609,000 people died.

But not every insurer sees a threat to business. A small insurance company, Mint Canadian Specialty Underwriters, is offering small and medium-sized companies a plan that will offer payouts of between $5,000 and $50,000 per day, for a maximum of 30 days and a total payout of $1.5 million. The plan will be available starting next month.

"It's always a problem with events that have the potential to be catastrophic," says Daniel Diermeier, professor of regulation and competitiveness at the Kellogg School of Management at Northwestern University. "You don't know how likely it will occur or if it will occur at all."

But even if H5N1 doesn't turn into a pandemic, one is likely to occur in the near future. Three pandemics occurred in the last century. In 1918, between 50 and 100 million people died from the Spanish Influenza, with half being between 20 and 40 years old. In 1957, the Asian Influenza left 2 million dead, while a million people died in the Hong Kong Influenza of 1968.

Organizations can't afford to be seen as lacking in preparedness, Diermeier warns. "Imagine the impact it would have if you didn't prepare and the pandemic occurred."