Executives are starting to confront the real chance of panicked workers, supply disruptions, and economic upheaval
Sometime, somewhere, the seeds of a potential global pandemic will be sown. In Indonesia, Thailand, China, or any other country where the intimate mingling of people, poultry, and pathogens creates a cauldron of viral evolution, a bird flu bug will mutate so that it can be transmitted from person to person. And when that happens, Deutsche Bank (DB ) will be ready. "The moment that there is human-to-human infection, we would execute a set of measures," says Kenny Seow, DB's business continuity manager in Singapore. The giant multinational's steps include making sure employees in infected zones don't carry the disease to co-workers, moving others out of harm's way, communicating medical bulletins to far-flung offices, and preparing for the inevitable economic shocks as mass illness slows trade and undermines both public services and private commerce.
What's unusual about Deutsche Bank is that it actually has a crisis plan for a possible pandemic. A new survey of multinational companies by Continuity Central, a London-based newsletter, finds that 72% have yet to begin to prepare. And an informal BusinessWeek poll of a half-dozen major utilities showed that none has a specific plan to keep the power flowing during a flu epidemic.
Business' go-slow approach contrasts sharply with the concerns of health officials, who are anxiously tracing the spread of avian flu across Asia and into Europe. Corporations don't want to panic employees or spend money unnecessarily, the way they did for Y2K. And experts say most companies don't yet realize how serious the economic effects of a pandemic could be.
Yet the impact of a flu crisis could be comparable, at least in the short term, to the Great Depression, cautions Sherry Cooper, chief economist at investment firm BMO Nesbitt Burns. Adds Robert S. Wilkerson, preparedness expert at risk consultant Kroll Inc.: "If you take the Centers for Disease Control's worst-case scenario of millions infected and hundreds of thousands of deaths in the U.S. alone, corporations are just beginning to wrestle with it." In that worst case, essential services such as water or power would be disrupted, supply chains cut, international travel and trade halted, and crucial workers sickened or killed. Compared with the potential devastation, some common company preparations to date -- stockpiling masks or telling employees to wash their hands -- seem like whistling past the graveyard.
Increasingly, though, the threat of a global pandemic is beginning to creep into executive suites. "It's a giant leap from a year ago, when it was not on the business community's radar screen," says Dorothy Teeter, director of public health for Seattle & King County, Wash. DuPont (DD ) formed a 20-person pandemic team in May. With avian flu spreading, the team stepped up its pace in October and now meets every week. French construction materials company Lafarge, which lost 200 employees in Indonesia during last December's killer tsunami, has launched an avian flu intranet site to send information to distant operations. Pitney Bowes Inc. (PBI ) in Stamford, Conn., is ensuring that large numbers of employees can work from home. And 17 U.S. airports have or are setting up quarantine programs. The lesson from past megadisasters is that "you have to think the unthinkable," says Christian Crews, director of futures strategy at Pitney Bowes (PBI ).
Planning for the unimaginable, though, is difficult. The range of possibilities is huge, from a small outbreak in Asia that's quickly snuffed out to a global disaster that undermines the basic functions of life. "At the end of the day, the pandemic threat is not just a threat to health but to the stability of the social fabric," notes Howard Pien, CEO of vaccine maker Chiron Corp. (CHIR ).
That's why Corning Inc. (GLW ) is asking its business units a series of tough questions, says director of health services Dr. James Schuppert: "Could you run your facility with 30% to 40% absenteeism? Do you have the infrastructure you need?"
Clearly, business can't keep the economy running by itself. U.S. executives are counting on the federal government to fund production of vaccines and drugs to fight the pandemic if it strikes. But while Washington debates sums and strategies, there is an emerging consensus on best practices for companies. One broad category is finding backups for suppliers or essential work functions. "Cross-training of employees is crucial," explains Margaret Read, a crisis manager at Cingular Wireless in Redmond, Wash.
Another response is keeping people apart to limit the disease's spread. That means technology and support for working from home or teleconferencing. "If [businesses] need to firm up their IT infrastructure for telecommuting, the time to do it is now, not when the pandemic hits," says Dr. Isaac Weisfuse, deputy commissioner of the New York City Health & Mental Hygiene Dept.
A pandemic could also force social adjustments. "The heroism in our culture of going to work when you're sick has to change," says King County's Teeter. Howard Lincoln, CEO of the Seattle Mariners baseball team, says he has told his employees to stay home even with ordinary illnesses. "We told people that if you come to work with the flu, it might be the last day you work at the Mariners."
That's a start. But overall, experts caution, management has to do a better job of communicating the flu threat and containment strategies. Stephen Aldrich, CEO of preparedness consultant Bio Economic Research Associates, believes that a pandemic will bring at least two economic shock waves. "The first -- driven by fearful anticipation -- will precede the actual arrival of the disease, and it's likely to be the larger of the two," he explains.
Indeed, fears of avian flu are already affecting business. A Kroll client recently planned a seminar in Singapore -- only to have half of its instructors refuse to go. They agreed to participate only after learning more about the disease and about how they could take steps to avoid infection.
If a human pandemic were to break out, a major challenge for companies would be to provide accurate and credible information to all employees. In DuPont's war-gaming of pandemic scenarios, "a key focus has been on giving our people timely information on what is happening and what our response will be,"says Dr. Sol Sax, chief medical officer.
These measures, however, raise uncomfortable questions. Yes, people should stay home if they are sick. But many will insist on coming in because they fear losing wages or their jobs, says Kim Elliott, deputy director of the nonprofit Trust for America's Health. "Will Wal-Mart (WMT ) pay its hourly workers for not coming in?" she asks. Some companies have assured employees that they will continue to pay wages even if sequestered staff can't work.
A different set of questions revolves around how much business should be spending on preparations. Steps such as cross-training employees or installing new networking technology for telecommuting are expensive. "It's not in the best interest of the shareholders to overinvest," cautions Pitney Bowes's Crews.
But health officials fear that a wait-and-hope approach could put the economy in a serious bind if the worst happens. "The business community, like the rest of society, is not adequately prepared," warns U.S. Health & Human Services Secretary Michael O. Leavitt. Hurricane Katrina already taught this country the perils of ignoring warnings. Unless they heed that lesson, companies in the U.S. and around the world could be in for something far more devastating if a flu pandemic materializes.
Prevent a Pandemic,MaKe a Profit
Daniel R. Dwight didn't intend to cash in on the threat of a flu pandemic. Five years ago his Belmont (Mass.)-based company, Kronos Advanced Technologies Inc., set out to make a fan with no moving parts. The secret: put high voltage across an array of wires. That creates a flow of charged particles -- ions -- strong enough to pull air along. Early tests, though, showed an unexpected benefit: The electrical field also rips molecules apart, destroying pathogens such as anthrax spores or flu viruses. Of course, this feature wasn't a big selling point in those pre-September 11 days. "When we said 'anthrax,' people gave a yawn," recalls Dwight.
They aren't so bored now. Kronos' virus killer "could be a hell of a device" for filtering air everywhere from hospitals to airplanes, says Peter Goelz, former managing director of the National Transportation Safety Board. Kronos has begun to talk with Korean Air and Singapore Airlines Ltd., two carriers badly hit by the Asian SARS epidemic of 2003. "We can't keep up with the calls," says Dwight.
Where there's disaster, there's opportunity for business. Consultants such as Booz Allen Hamilton Inc. and Kroll Inc. (MMC ) are already selling advice to business and governments on flu preparedness. Companies are stocking up on items thought to slow the spread of disease such as masks and hand sanitizers -- potential sales for companies like Beijing-based Kimberly-Clark (China) Investment Co. (KMB ) President Stephen Shao says his company is already developing new lines of medical masks, wipes, and hand-washing liquids.
Public health officials say that with the right early warning systems, they could spot a dangerous flu strain soon enough to snuff it out. The pot of gold: $1 billion-plus that countries have proposed to spend on enhancing global biohazard surveillance. Enter Applied Biosystems (ABI ), the company that made the advanced sequencers that deciphered the human genome. "We are taking capabilities developed over the last 25 years to make this early warning system available," says Christopher P. Melançon, director of biosecurity in the company's Applied Markets Div. On Nov. 8 the Foster City (Calif.) company unveiled a device that can detect the flu virus in two hours and a genetic decoding kit to find potentially deadly mutations.
Other players see an opening. By yearend, CombiMatrix Corp. of Mukilteo, Wash., plans to deliver to the U.S. Air Force prototypes of a lab-on-a-microchip device that can diagnose particular strains of avian flu in four hours.
If one of these new detectors does sound the alarm, governments will embark on a crash program to develop a vaccine. That would be good for the bottom lines at flu vaccine makers Sanofi Pasteur and Chiron Corp. (CHIR ). "We are in possession of some key technologies that will be very, very useful in addressing a pandemic," says Chiron CEO Howard Pien.
Other possibilities for profit will surely emerge. "Crisis is an opportunity as long as you see it first," says Christian Crews, director of futures strategy at Pitney Bowes Inc. (PBI ). He should know: Anthrax-infected letters in 2001 created a whole new business -- making the mail safe -- for his company. Even a disaster such as a global flu pandemic will make someone richer.