A severe worldwide influenza pandemic could shrink the worldwide gross domestic product by 4.8% and significantly hamper corporate revenues and profits, underscoring the need for corporations to have pandemic preparedness plans in place, a new report says.

The report on pandemic preparedness, by Amin Mawani, associate professor of the Health Industry Management Program at the Schulich School of Business at York University in Toronto, was presented on Monday at the World Conference on Disaster Management in Toronto.

It notes that a severe pandemic could cost about $3.1 trillion, and could have an impact on global economic production nearly four times greater than the current global recession.

The report was the result of a roundtable on pandemic preparedness involving corporate risk managers from major industries across Canada.

“Large Canadian corporations understand that pandemic preparedness plans are critical to the health of their bottom line and have invested considerable resources to strengthen existing plans,” said Mawani.

He noted that some of the current practices for pandemic preparedness among Canadian firms include ongoing communications with employees, hand hygiene, travel restrictions, and access to sanitizers and related supplies for equipment handling.

But corporate risk managers may need to consider and implement other measures to reduce the risk of employee infection, the report says. It suggests such strategies as social distancing, personal protective equipment, antiviral stockpiles, and self-quarantine.

The report comes a week after the World Health Organization elevated the pandemic alert surrounding the influenza A/H1N1 virus to Phase 6, which means a full-scale pandemic.

According to the WHO, the H1N1 flu virus could continue to spread around the world in the next several months, reaching further into the southern hemisphere during the winter season, then possibly resurging in the northern hemisphere in the fall.

For individual companies, the biggest cost associated with an influenza pandemic would be employee absenteeism. The report estimates that 15% to 30% of employees would stay home during a moderate to severe pandemic because of illness, family-care responsibilities, and fear of being infected in the workplace.

Since employees are the principal profit drivers in most corporations, prolonged absenteeism would have a significant adverse impact on a corporation’s revenues and profits, according to the report.

As a result, companies capable of preventing absenteeism during a pandemic would be well positioned to attract customers and market share from those that cannot, the report says.

It suggests that corporations invest in pandemic preparedness as a form of insurance. As pandemic risks become more widely accepted, the report says unprepared companies may find themselves legally liable to their stakeholders – including shareholders, for potentially poor returns; employees, for potential inadequate or unsafe working conditions; and customers, for potentially breaking contractual commitments during a pandemic.

“Investment in pandemic preparedness can be viewed as insurance,” said Mawani. “The use of all combined best practices can and must be evaluated by senior management when employees are the key profit drivers in most organizations.”

IE