While the 2014 Ebola outbreak was at its peak, not a day went by without another terrifying media report about the potential death toll and economic impact if the disease were to spread. Reports of panic heightened the sense of imminent global disaster, and sense that the response was inadequate.
It will be the same story next time around – indeed, the 2015 MERS outbreak in South Korea saw the government heavily criticized for its inadequate response.
“People only start talking about pandemics when they happen,” warns Aon pandemic expert Irfan Akhtar. “When it goes out of the news it goes out of their minds.” The message from disease experts is clear – it’s not a matter of if, but when the next major pandemic will hit.
While pandemic planning has traditionally been seen as the purview of governments it can be the economic disruption to our increasingly globalized world as much as the health impact that can hit businesses the hardest. Jim Yong Kim, the President of the World Bank, has warned that a new pandemic could kill tens of millions, and reduce global GDP by five to 10 percent, Akhtar notes. While many companies may have disaster plans, developing pandemic response plans is equally vital to minimize potential disruption, as well as to keep your workforce and customers safe – especially if governments remain slow to act.
The 2014 Ebola outbreak saw a confirmed death toll of just under 11,300 by July 2015, despite early projections of over a million fatalities. Equally, while the World Bank initially forecast potential economic losses of US$32.6 billion from Ebola, the final toll was just US$2.2 billion. Meanwhile, the recent MERS outbreak in South Korea has been declared over with 36 dead, far below the thousands of lives it could have claimed.
Just as with these two outbreaks, in recent years the world has been fairly lucky – most pandemics have had a relatively low death toll. This has led to complacency, according to one recent study: “[Survey] results suggest that people undervalue infectious diseases, which in turn is a contributing factor to our current lack of preparedness.”
While Ebola can have up to a 90 percent mortality rate, depending on the strain, other diseases can be highly contagious, like the 2009 “swine flu” outbreak, which reached 74 countries in a matter of weeks. Combine the fatality rate of one with the contagion rate of the other, and the outcome could be “apocalyptic”, Akhtar warns.
If a deadly, highly-transmissible disease emerges, how we respond will be vital to minimize the impact. New diseases are emerging all the time – and with it taking an average of six months to develop new vaccines, containing the spread in the early stages is essential.
The range of possible variables in a disease outbreak is so great that it is almost impossible to predict the next major threat. Instead, the best we can do is understand how pandemics spread, and plan to reduce their impact as much as possible.
A rising threat
The Spanish Flu pandemic of 1918 killed as many as 100 million people around the world, having infected a third of the world’s population, according to the U.S. Center for Disease Control. This was in an age before intercontinental air travel and globalization, and with a global population of just two billion, mostly in rural areas.
In today’s globally connected world, the challenges to delivering an effective response to a major outbreak are significant. The world’s population is over seven billion and rising. At the same time, air travel is also set to increase, from 3.6 billion air passengers flying per year in 2015 to double or triple that in the next 15-20 years. And more people than ever are moving to cities, where proximity helps diseases spread much faster – as many as five billion people are expected to be living in urban areas by 2030.
As we begin to live more closely together – both in terms of actual proximity in cities, and ease of travel via airplanes, the threat of contagion increases. This is how the 2009 Swine Flu outbreak – the same strain as the 1918 flu pandemic (H1N1) – moved so quickly. This is also why today’s pandemic risk prediction models have begun to introduce the concept of “effective distance” rather than actual distance to understand how infections are likely to spread. “Because of air traffic, it is plausible that someone from New York can be more likely to infect someone in London than someone in the next state,” says Akhtar.
The business implications of effective distance
The concept of effective distance is especially important to businesses. Despite the fact that the 2014 Ebola outbreak remained largely confined to a relatively small region of West Africa, the idea that diseases can be confined geographically no longer applies. Even though many flights to and from Ebola-affected areas were shut down, there were still dozens of planes travelling to and from the region every day. Hardly any business has a supply chain that doesn’t involve at least some goods or services from other parts of the world, any of which could be impacted by an outbreak.
The World Bank reports that between 1997 and 2009, just six disease outbreaks caused an estimated US$80 billion in economic losses, and notes that key to an effective response are efforts around prevention, preparedness, early detection and timely support.
With the rise of social media, the economic impact can be even greater as fear spreads faster, impacting travel as people try to avoid affected areas – or even areas thought to be affected. Panic buying can lead to shortages, while people avoiding travel and populated areas can also reduce sales. During the 2015 South Korean MERS outbreak, tourism to the country fell by as much as 60 percent and trade was also affected, prompting a US$19 billion government stimulus plan, according to the Wall Street Journal. The 2003 SARS outbreak, meanwhile, led to losses of some US$40 billion – “this was more about people’s behavior, especially reduced travel, than actual health care costs,” says Akhtar.
An effective response
Considering the potential economic impact, businesses should also look to develop pandemic response plans. Does your insurance cover potential disruption from disease? Would your supply chain suffer if transport from certain parts of the world is disrupted, or do you have contingency plans in place? Can your staff work from home and reduce travel to cut down the chance of spreading infection? When the next pandemic hits, do you know how to respond?
Moh Heng Goh of Singapore’s Business Continuity Management Institute recommends formulating clear, concise and fair HR policies to detail the actions that staff and your business as a whole should take in the face of a potential disease outbreak. This includes considering rethinking medical leave policies, reducing travel, minimizing face-to-face meetings, and ensuring that staff and offices report potential cases.
Aon’s Irfan Akhtar also recommends developing work from home strategies as part of your disaster preparedness planning, as prevention is always better than cure. Exploring options for diversification of your supply chain to minimize potential disruption if a key region is impacted is also important – and may be aided by quantifying risk levels for different regions in which you operate to develop containment plans.
The key lesson from most major pandemics and disease outbreaks to date has been that the impact is incredibly hard to predict. It’s very easy to get complacent after avoiding a disaster, but considering the potentially catastrophic worst case scenarios, prudence dictates that rather than wait until the next pandemic hits, you should start planning now.
“New diseases are now emerging at an unprecedented rate. No one expects this trend to end. Moreover, in a world of radically increased interdependence, international travel, and trade, there is no such thing as a local outbreak anymore.” – Margaret Chan, Director-General, World Health Organization
“A severe flu pandemic could result in US$3 trillion in global economic losses, equivalent to 4.8 percent of gross domestic product… Most of the losses would not be caused by disease directly, but rather by consumer reactions, labor shortages and cascading failures in economic and financial sectors.” – The World Bank
“I rate the chance of a widespread epidemic, far worse than Ebola, in my lifetime, as well over 50 percent… We’ve created, in terms of spread, the most dangerous environment that we’ve ever had in the history of mankind” – Bill Gates
“The cost of management of infectious disease outbreaks is almost always greater than the cost of avoiding them.” – The Lancet