How firms' disaster plans may fail in a pandemic

Business.view

Assuming the worst
May 5th 2009
From Economist.com

The parallels are eerie. A few people in a poor country start showing symptoms of a strange disease. Then clusters start popping up around the world, each connected to the starting point by a long, thin line traced through the air at 30,000 feet. Soon more clusters of disease start appearing, suggesting it is spreading easily from person to person. The World Health Organisation sounds the alert.

Switch swine flu for bird flu and Mexico for Thailand and events of the past week or so will be familiar to the 3,500 people who played an extraordinary “game” in 2006 to test the resilience of Britain’s banking system to a pandemic. Thankfully, swine flu shows every sign of being mild and susceptible to antiviral medicines. But the results of the British planning exercise provided a foretaste of what businesses may face in a second wave of infection if the flu mutated to become drug resistant or more virulent.

Be prepared. The drill was thought to have been the largest and longest of its kind. It involved 70 organisations and lasted six weeks, while simulating the passage of around five months. It found weaknesses in almost all the disaster plans drawn up by financial firms since the attacks of September 11th 2001 and highlighted the fragility of today’s highly networked society.

Business-continuity planning has become standard in big firms in recent years. But most plans are designed to deal with short-term events such as hurricanes or terrorist attacks. Preparation for these sorts of emergency can be fairly straightforward: arranging office space in case the usual workplace becomes unusable; having backup computer facilities in case the main ones are hit; and installing software that lets staff work from home.

Much as these preparations are an improvement over a decade ago, when few firms outside the hurricane belt were prepared for even minor disruptions, they still have failings. A study published in 2005 by the Bank of England, the Financial Services Authority and the Treasury found that almost half of the sites that the British banking industry depends on were within ten kilometres (six miles) of the Bank of England. Many of the banks’ backup sites were within the same radius. Thus a single catastrophe, such as a dirty bomb, in the middle of London could have crippled the banking system. Much has been improved since then but preparing for a pandemic is yet another order of magnitude harder and costlier.

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http://www.economist.com/business/displayStory.cfm?story_id=13600854