Emergency Planning is a Win-Win

Needle and flu vaccine.

The Schulich School of Business at York University in Toronto recently released the first study to assess the impact of an influenza outbreak on individual companies. Presented at the World Conference on Disaster Management, the study, “Making a Case for Investing in Pandemic Preparedness,” focuses on how companies can justify investing in emergency planning using standard business performance metrics. The study highlights that an investment now far outweighs the potential impact that a pandemic could have on individual businesses.

According to world health experts, it’s not a matter of “if”, but “when” the next influenza outbreak will strike. The cumulative probability of an outbreak over time is expected to be in the range of three to 10% for 2008, 14 to 41% by 2012 and 26 to 65% by 2017.

“The probability that an influenza pandemic can adversely affect a company’s employees is greater than the probability that a fire could adversely affect a company’s property,” says Dr. Amin Mawani, the study’s author and Associate Professor in the Health Industry Management Program at the Schulich School of Business. “Firms don’t hesitate to buy fire insurance, yet seem reluctant to invest in protecting themselves against an influenza outbreak. The study presents a compelling business case for investing in pandemic preparedness.”

Given our inter-connected world with global supply chains, an influenza outbreak could result in corporations experiencing severe absenteeism of 30 to 40% among employees. Prolonged absenteeism and supply chain disruptions would have a significant adverse impact on a corporation’s revenues and profits. Given the probability of a pandemic occurring and the potential adverse impact, the Schulich report demonstrates that corporate pandemic preparedness, which includes preventative measures such as stockpiles of antiviral medicine to protect employees, makes financial sense when looking at common business metrics such as net present value (NPV), internal rate of return (IRR) and payback.

“The study also suggests that companies cannot afford to miss being prepared for an influenza pandemic, especially when their competitors are getting prepared,” adds Mawani. “Competitors who have prepared themselves can have a unique window to steal market share during a pandemic, as well as to make strategic moves that may be harder to reverse later.”

Emergency-prepared suppliers can enjoy a comparative advantage even if a pandemic never occurs, since customers will feel more secure about the reliability of their supplies.

SOURCE: The Schulich School of Business