Below is a partial list of potential adverse impacts of a Pandemic Outbreak on your organization’s productivity. Some of these costs may be insured but experience shows that only around 40% of actual loss is covered by insurance.
Emergency Preparedness – potential adverse impacts
- Brand image recovery
- Loss of share value
- Loss of interest on overnight balances; cost of interest on lost cash flow
- Delays in customer accounting, accounts receivable and billing/invoicing
- Loss of control over debtors
- Loss of credit control and increased bad debt.
- Delayed achievement of benefits of profits from new projects or products
- Loss of revenue for service contracts from failure to provide service or meet service levels
- Lost ability to respond to contract opportunities
- Penalties from failure to produce annual accounts or produce timely tax payments
- Where company share value underpins loan facilities, share prices could drop and loans be called in or be re-rated at higher interest levels.
- Additional cost of advertising
- Cost of replacing equipment
- Cost of replacing software
- PR and marketing to reassure customers and prospects to retain market share
- Cost of replacement of buildings and plants
- Salaries paid to staff unable to undertake billable work
- Salaries paid to staff to recover work backlog and maintain deadlines
- Cost of re-creation and recovery of lost data
- Loss of cash flow
- Interest value on deferred billings
- Penalty clauses invoked for late delivery and failure to meet Service Levels
- Loss of customers (lifetime value of each) and market share
- Loss of profits
- Additional cost of credit through reduced credit rating
- Recruitment costs for new staff on staff turnover
- Training / retraining costs for staff
- Fines and penalties for non-compliance Liability claims
- Additional cost of working; administrative costs; travel and subsistence
Potential first round of action
The first phase may be to create a task force and develop a plan. It will require functional checklists by Pandemic Phase and develop policies (e.g. Visitor, Travel, HR Compensation). Thereafter the organization may consider conducting tabletop exercises for all departments. This would be followed by the Arcus Pandemic Communications and Training Plan which will include lunch and learn sessions with scenario planning with Business Units for testing. In addition, Trained Security and Emergency Response Team (ERT) members would be created at all locations on Personal Protective Equipment (PPE).
The process will be developed in partnership with regional managers for planning. Meetings would be arranged with all Department of Health representatives in areas where the organization has major operations. The process would be followed by Pandemic exercises for employees.
Initial Stumbling Blocks
Challenges faced may include lack of participation and lack of information. There may also be a need to change Business Continuity Planning Assumptions. For example, when one location is down, can the organization turn to other facilities and resources to pick up the business? There may also be a gap in education and awareness with limited buy in and low sense of urgency among business continuity planners, executive leadership and staff.
Window of recovery
This time window is commonly known as the Maximum Acceptable Outage. An effective analysis assesses the impact of the Pandemic over time. Typically, there is a breathing space before the impact begins to have an adverse impact. The length of time depends in part on the process and in part on the industry. In real time financial operations, the time window may be minutes. For other organizations, it may be days or even weeks. After all, many organizations close down for weekends and public holidays. The Arcus impact analysis will identify what this time window is by which recovery has to be in place for the organization.