Infectious disease outbreaks like COVID-19 have two primary impacts on organizations: Operations and People
Operations: Outbreaks can affect business continuity management, cause supply chain and business interruptions, demand effective crisis communications, test risk transfer strategies, cause losses and have a negative impact on business due to associated economic slowdowns. For example, businesses reliant on parts and materials from China are already confronting the threat of supply chain disruptions.
People: Organizations can experience the impacts of a disease outbreak in areas such as absenteeism, return-to-work issues, succession planning, employee communications and employee benefits.
In the face of such a health emergency, governments can respond by suddenly imposing strict quarantine measures, such as the cordon around Wuhan. These responses can cause business interruptions and force organizations to slow operations or even cease them altogether.
The impacts of a global disease outbreak can be particularly severe for organizations lacking an adequate communicable-illness policies and response plans. The COVID-19 crisis highlights how organizations must update and expand their crisis management and business continuity plans with an emphasis on employees, customers, supply chain contacts, stakeholders and business assets.
Nancy Green, an executive vice president in Aon’s Commercial Risk Solutions business and coleader of Aon’s COVID-19 task force, reminds us that outbreaks do occur, and “while we can’t predict when one happens or the scale it achieves – we can prepare for the impact.” In a connected world where global business and travel is the norm, worldwide disease outbreaks are inevitable. Businesses must anticipate the threat and assess the economic and financial impact a pandemic or infectious disease might have on their organizations.
Key steps include updating crisis management and business continuity plans as necessary as well as implementing employee contingency and communications plans for addressing an outbreak’s impact. Understanding the potential impacts on supply chains and mitigating them as necessary is also essential. In addition, organizations should consider how risk transfer methods such as insurance might respond to pandemic-related costs.
Finally, it is important to remember that during times of crisis, not everything goes according to plan. “When plans are tested by black swan events, such as a pandemic,” Green explains, “it can be a forcing mechanism that brings teams together to further develop capabilities, maintain a good decision-making environment during an evolving situation and ultimately prepare for the impact by building a path to resilience together.”