RiskBusiness Releases Results of Swine Flu Pandemic Survey

London - 4 May 2009

In response to the widespread media coverage of the Swine Flu outbreak in Mexico and the ensuing positive testing of individual cases in more than 20 other countries globally, RiskBusiness International Limited facilitated a Pandemic Scenario Benchmarking Survey amongst more than 50 financial services firms around the world between the 30th April and 4th May 2009.

While the current situation has been described by many commentators as a possible pandemic and with the World Health Organisation setting the influenza pandemic alert rating at 4 (out of a maximum possible 5), the actual outbreak currently falls short of the major requirements for a formal pandemic ("A pandemic can start when three conditions have been met: a new influenza virus subtype emerges; it infects humans, causing serious illness; and it spreads easily and sustainably among humans"1) This was confirmed as of 4 May by the survey, although the situation may still deteriorate further.

The Pandemic Scenario Benchmarking Survey focused on 4 key areas: (1) the degree to which financial institutions have formal business continuity and resilience programmes in place to combat the effects of a pandemic; (2) whether any formal business impact assessment has been conducted on the impact of a pandemic; (3) whether any attempt at economic quantification has been undertaken; and (4) whether the participating financial institutions have initiated any form of action as a result of the Swine Flu outbreak. The survey participants were drawn from Europe, Middle East and Africa (61%); Asia-Pacific (30%) and the Americas (9%).

The survey results were announced by Mike Finlay, RiskBusiness’ Managing Director for Europe, the Middle East, Africa and Asia-Pacific. “It is very encouraging that 72% of financial institutions surveyed have a pandemic-specific business continuity and resilience programme in place, however what is of concern is that some 30% of those programmes have either not been reviewed for more than 12 months or have never been reviewed, while some 42% have either not been tested in more than 12 months or have never been tested. This has to raise questions about how prepared financial institutions actually are”. The survey showed that on a geographic basis, 41% of participants from Europe, Middle East and Africa have recently reviewed their pandemic-specific business continuity and resilience programme, as have 64% of the Asia-Pacific participants and 75% of the participants from the Americas.

“Another issue of concern is around existing threat assessment and response programmes,” continues Finlay. “Less than 50% of participants have a formal internal threat level assessment mechanism in place - at present, some 75% of participants who do have such a mechanism have seen it triggered by the current potential Swine Flu pandemic. At the same time, two thirds of all participants have indicated that they have taken some form of action in response to the potential pandemic, with such action ranging from initiating crisis committee meetings, increasing staff awareness, active monitoring of the situation and stock-piling vaccine and disinfectants to travel bans”.

Given the Asian experiences with SARS and avian flu, RiskBusiness anticipated that most Asian firms would evidence a good state of preparedness. “Over 72% of Asian participants indicated that they have pandemic-specific business continuity and resilience programmes in place, while 65% confirmed that their internal threat level assessment mechanisms have been triggered, states Garth Hinton, Executive Director for Asia-Pacific at RiskBusiness. “Those participants who do not currently have pandemic-specific business continuity and resilience programmes are either relatively small or are new players in the region”.

Hansruedi Schütter, Executive Director responsible for Europe and the Middle East compares Asia and the Middle East: “The Asian results contrast significantly to those of the Middle East, where almost 60% of participants do not have pandemic-specific business continuity and resilience programmes and the same number have not taken any steps at the current time to address the potential Swine Flu pandemic. Europe appears far more prepared, with over 85% having a pandemic-specific business continuity and resilience programme in place – interestingly Southern and Eastern Europe appear to be the least prepared areas within Europe”.

“One of our core focus areas here at RiskBusiness is facilitating peer benchmarking and this survey is an example of how comparative business intelligence empowers management to address emerging threats as and when necessary,” commented Jonathan Davies, RiskBusiness’ Managing Director for the Americas. “Participants can use the detailed survey report and compare how their organisation compares to the mean – for example, if a firm uses a median frequency for a pandemic of once every 100 years and the mean for their peer group is once every 50 years, that implies that the firm is potentially under-estimating the potential frequency of a pandemic. If scenario analysis output is employed for capital estimation purposes, this could also imply an under-assessment of the required regulatory and economic capital levels necessary to protect the firm under such a situation”.

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