Is the Industry Prepared for a Swine Flu Pandemic?
May 4, 2009
The avian flu epidemic that some feared would jump from Europe to North America two years ago hasn't quite materialized. But late last month, an outbreak of swine flu crossed from Mexico into the U.S. and the number of reported cases is climbing quickly. On April 28, the World Health Organization for the first time raised its pandemic threat alert level to phase 5--if it reaches phase 6, that means a full-fledged pandemic is underway.
The good news--if there's any to be had-is that the financial services industry conducted a pandemic testing exercise in fall 2007 that helped firms identify business continuity planning weaknesses. But the exercise, which involved 2,700 organizations and was run by the Securities Industry & Financial Markets Association, Financial Services Sector Coordinating Council (FSSCC) and the Financial and Banking Information Infrastructure Committee, took place in a very different environment. Staffing at many of the participating firms has since been cut to the bone.
In the test, firms relied more heavily on telecommuting, which raised bandwidth concerns. While infrastructures have since been bolstered in some residential areas, it may be difficult for employees to work from home indefinitely--and impossible for some jobs. "The financial services industry said, 'let's telecommute,'" notes Randy Larsen, national security adviser to the Center for Biosecurity at the University of Pittsburgh Medical Center, which ran a pandemic exercise for Deutsche Bank in New York two years ago.
Multinational firms would have to launch a staggered program that accommodates countries' disparate threat levels. "Firms with enterprises in Mexico City will react differently than a branch in Minneapolis, for example, because of conditions on the ground," says Shawn Johnson, vice chairman of the FSSCC and chairman of State Street Global Advisors' investment committee. "They also have to obey local authorities, which may mandate closing a building sooner than a firm planned."
Viruses often act like financial markets: They change unexpectedly. But while investors receive signals about market behavior, viruses give no warning that they are mutating. In the three- to four-month period experts say it could take to develop a new vaccine, the current virus could mutate and become resistant, though that's a worst-case scenario.
Infrastructure testing is no substitute for effective inoculation. The Department of Homeland Security announced April 26 that it had released 12 million doses of Tamiflu--about one quarter of the nation's stockpile--to state governments. But the Center for Disease Control and Prevention said the following day that it does not believe current vaccines are effective against H1N1, the current strain of the virus.
How long could a swine flu pandemic last? "Think about a blizzard that hits New York," says Larsen. "People are snowed in for a couple days and can't get around. Now think of what it would be like to be snowed in for 18 months."
That's the duration for pandemics for which there is reliable data, Larsen says. "It could come fast in the beginning, get everyone's attention then start to peter out and leave everyone with a false sense of security. By fall or early winter it could come back hard." There have been ten pandemics in the last 300 years, or one every 30 years, he adds. "We're overdue."
