Economic Consequences of a Pandemic .....

Active analysis can be subdivided into three categories of possible threats/occurrences that could befall an organization. Dr. Ian Mitroff refers to the three categories as Natural Accidents, Normal Accidents and Abnormal Accidents. I have renamed them and to differentiate the three aspects of each. That is, the threat, the actual occurrence and the consequence of the occurrence.

 • Natural Threats/Occurrences/Consequences consisting of such things as drought, floods, tornadoes, earthquakes, fires and other naturally occurring phenomena.
• Normal Threats/Occurrences/Consequences consisting of such things as

- Economic Disasters, such as, Recessions, Stock Market Downturns and Rating Agency Downgrade, etc.

- Personnel Disasters, such as Strikes, Workplace Violence, Vandalism and Employee Fraud, etc.

- Physical Disasters, such as Industrial Accidents, Supply Chain, Value Chain, Product Failure, Fires, Environmental and Health & Safety

• Abnormal Threats/Occurrences/Consequences consisting of

- Criminal Disasters, such as Product Tampering, Terrorism and Kidnapping & Hostages, etc

- Information Disasters, such as Theft of Proprietary Information, Hacking, Data Tampering and Cyber Attacks, etc

- Reputation Disasters, such as Rumors, Regulatory Issues, Litigation, Product Liability, Media Investigations and Internet Reputation, etc.

Please note Abnormal Threats/Occurrences/Consequences are becoming more of the norm than abnormal as we see the normalization of threats such as hacking and data tampering.

Five key assumptions were used as a basis to for the developmental framework of the "Futureproofing" methodology. These are:

• Assumption # 1: The modern business organization represents a complex system operating within multiple networks

• Assumption # 2: There are many layers of complexity within an organization and its "Value Chain"

• Assumption # 3: Due to complexity, active analysis of the potential consequences of disruptive events is critical

• Assumption # 4: Actions in response to disruptive events needs to be coordinated

• Assumption # 5: Resources and skill sets are key issues

Based on the above assumptions and the results of the baseline analysis (static analysis) one realizes that the timely identification, classification, communication and response, management and recovery from a disruptive event are critical. As depicted in the graphic on the next page over time uncertainty will decrease, as will available options for response and recovery.

This is contrasted with increasing numbers of issues and higher and higher costs associated with response and recovery efforts. As such, an organization should seek to continually analyze situations so as to develop a clear picture of the current state of the business system network. Referred to as "Data Fusion - Constructing a Mosaic" by LMS; this is a process of getting enough bits and pieces of information in place in order to transform seeming chaos into recognizable patterns upon which decisions can be made.

Second, recognize that you cannot depend on public authorities (read this as government at all levels) to be there for your organization. They will have too many issues to deal with and they will also be impacted by the pandemic – remember that 30% of the population could be affected; that means that civil authorities are just as susceptible to contracting the disease. Your organization and its “value chain” must its own comprehensive plan for dealing with the business consequences of a pandemic. Rethink the basis on which you developed your plan – talk to the risk management and strategic planning personnel in your organization and find out what they are looking at with regard to business expansion, contraction, risk mitigation, etc. They should be very conversant as a result of the recent hurricanes, earthquakes, tsunami and general competitive forces in the economy. Revise your business continuity plan. Develop the ability, as an organization, to sequence back your operations while ensuring that your business system and its network (“value chain”) can maintain level of functionality while operating at reduced capability. When your business system and its network reaches the state of minimum functionality, the organization can begin to conduct a campaign of "agile restoration" until it achieves a state of full functionality and a return to normal operations.

If you do the first step, putting in place an effective surveillance system, you will develop "detectors and indicators of change" metrics that can be employed to facilitate the constant analysis of the state of the business system and its complex "value chain" network. The "detectors and indicators of change" provide the early warning basis for event classification at the lowest (least severe) levels.

Third, train, drill, exercise. All the planning in the world is never going to be effective unless it can be implemented. One key to implementation is having a trained organization. That means that we have to train not only the primary position holders in our organization, but we have to train the secondary and even a third level within the organization.

If Only We Had Known…A New Paradigm for Planning Strategists

In my latest book, “Integrated Business Continuity Planning: Maintaining Resilience in Uncertain Times” I asked:

"Is Business Continuity integrated into your business operations as a way of doing business; or is Business Continuity an adjunct to the business that you are involved in?"

As you ponder this question, you need to reconsider the value proposition offered by having an integrated approach to business continuity.

I offer the following definitions for the purpose of this article and as a basis for developing an “integrated” approach to continuity:

Crisis: "A disruptive event that is amplified, elevated and magnified."

Business Continuity: "All initiatives taken to assure the survival, growth and resilience of the enterprise."

Executives have an obligation to their stakeholders to assure that everything that can reasonably be done to protect the business and ensure its competitiveness in the marketplace is done. Unless executives rethink the relationship between how they do business (strategy, competitive intelligence, etc.) and the way they currently address business continuity (managing disruptive events, security, etc.), the imbalance between "security" and competitiveness will not be resolved. Therefore, businesses must rethink their recovery strategies to be able to deal with and survive pandemics. This is a whole new paradigm for planning strategists.

Conclusion: Seize the Initiative - It Makes Sense

A Chinese proverb states that "Opportunity is always present in the midst of crisis." Every crisis carries two elements, danger and opportunity. No matter the difficulty of the circumstances, no matter how dangerous the situation… at the heart of each crisis lays a tremendous opportunity. Great blessings lie ahead for the one who knows the secret of finding the opportunity within each crisis.

Today business leaders have the responsibility to protect their organizations by facilitating continuity planning and preparedness efforts. Using their status as “leaders,” senior management and board members can and must deliver the message that survivability depends on being able to find the opportunity within the crisis.

Market research indicates that only a small portion (5%) of businesses today have a viable plan, but virtually 100% now realize they are at risk. Seizing the initiative and getting involved in all the phases of crisis management can mitigate or prevent major losses. Just being able to identify the legal pitfalls for the organization of conducting a crisis management audit: can have positive results.

We cannot merely think about the plannable or plan for the unthinkable, but we must learn to think about the unplannable. Business continuity planning must be overlapping in time, corrective in purpose complimentary in effect.

About the Author

Geary W. Sikich is the author of "It Can't Happen Here: All Hazards Crisis Management Planning," "Emergency Management Planning Handbook" available in English and Spanish-language versions and, "Integrated Business Continuity: Maintaining Resilience in Uncertain Times," www.Amazon.com and over 150 published articles. Mr. Sikich is the founder and a principal with Logical Management Systems, Corp. (www.logicalmanagement.com). He has extensive experience in management consulting in a variety of fields and consults on a regular basis with companies worldwide on continuity and crisis management issues. He has a Bachelor of Science degree in criminology from Indiana State University and Master of Education in counseling and guidance from the University of Texas, El Paso.

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