When pandemic strikes: does your company have an action plan?
Following reports of the first Ebola transmissions on U.S. soil, the threat of the disease continues to escalate across the world. The Ebola outbreak is only the latest version of potential worldwide pandemics with serious economic impacts affecting supply chain and business operations for companies of all types. Industries like mining, agriculture and energy face the greatest risks with Ebola, since these groups have a high number of operation bases and workers in the affected nations. However, companies that do not operate in Africa may also experience business interruptions when employee access to the workplace is compromised.
While it may be tempting to ignore the impacts of infectious diseases like Ebola while they remain outside of the U.S., the contagious nature of these viruses allows them to spread quickly. Companies may be at risk even without a presence in the affected area or a global supply chain. As we all know, employees are the cornerstones of any operation and maintaining their health and safety is a priority. Organizations may run into operational difficulties should employees be prevented, or choose to avoid their workplaces if the fear of contamination exists.
Domestically, the CDC mirrors the World Health Organization’s approach to combating the spread of infectious diseases by utilizing Isolation and Quarantine as the two main strategies. Quarantines can pose a direct exposure to organizations by preventing employees from accessing their workplace. In some cases suspected individuals may be isolated in their home or a hospital. Earlier this year, Sierra Leone confined residents to their homes for three days in September, and an NBC news crew was recently placed under a mandatory quarantine issued by New Jersey officials. More extreme cases, like those in Liberia’s capital, saw isolation of entire neighborhoods. Quarantined areas may also disrupt manufacturing operations residing in the effected region. Travel and logistical networks to these facilities may be further exposed due to a drastic reduction in air traffic to Africa, while quarantines and border closings threaten supply chain workers traveling in and out of the region. A robust supply chain considers the impact should employees be unavailable for a certain amount of time.
Here in the U.S., the best way to prevent Ebola from having a permanent impact on your organization is to ensure that a plan of action exists. Does your organization have a strategy in the event of Ebola or another contagious disease? How will Extra Expenses be covered? Insurance can be utilized to mitigate potential exposure by offering coverage for various scenarios and can be a crucial part of any contingency plan. Risk managers should closely review coverage triggers for Business Interruption (BI) and Contingent Business Interruption (CBI), particularly when it comes to pandemic outbreaks.
It should be also be note that WGA has just announced the release of Pandemic Coverage geared for healthcare facilities. This and other available products are a great means for transferring risk.
About the Author
Emmeline Kuo is an Associate Property Specialist at William Gallagher Associates (WGA) in the Property and Casualty Group. She is responsible for placing property insurance for clients, working with them to understand their operations and insurance needs.