Businesses need to prepare for the possibility of the next flu pandemic, counsels BMO Nesbitt Burns in its second report on the issue.

It estimates that ordinary influenza costs the U.S. economy roughly US$10 billion to US$12 billion annually in direct medical costs and loss of productivity. “Bad as that is, a pandemic flu could kill over half a million in the U.S., hospitalize more than 2 million, and cost the U.S. economy a staggering US$70 billion-to-US$167 billion, according to early CDC studies,” it notes. “The cost to Canada would be around $8 billion-to-$18 billion (Canadian dollars).”

However, those figures could be much larger, it warns. Adding that other countries around the world could face “similar to more disastrous” numbers.

“With the U.S. the engine of global growth, slowing trade and U.S. activity would slow economic activity worldwide,” it says. “As discussed in our earlier report, the repercussions on global trade would be devastating. Given that virtually all major economies have a trade surplus with the U.S., trade disruptions would shutter manufacturing plants and curtail global demand for most commodities.”

“To the extent that business could create its own internal stockpiles, similar to Wal-Mart and Home Depot during Hurricane Katrina, business could go on and demand for essentials could be satisfied, but these possibilities will be limited and must be carefully planned in advance,” it notes. On that count, it urges businesses to plan for themselves.

“Business-continuity planning is essential — companies must help to protect employees’ health, and they will need to work with health officials to minimize disruption,” it says. “But leaning on government will not be enough. Many businesses are multi-national, under the auspices of numerous national, state/provincial, and local governmental authorities. Already, many corporations are developing pandemic-specific emergency plans, focusing first on their Asian employees and businesses, and then on the rest of the world.”

BMO says that Deutsche Bank reports it has already drawn up plans, and HSBC, with its large Asian presence, says flu plans will be ready by year-end. This reportedly includes staff repatriation, more call centres, shift-working in different parts of the world, and telecommuting. Communication businesses must also protect their employees, it notes, and assure that they have adequate sources of food, water and other essentials. Unfortunately, this will not be easy, as shortages could emerge everywhere. “At the first sign of a pandemic, there would be a run on indispensable items such as food, water, and power. People would also attempt to stock up on essential medications and medical products such as insulin, heart drugs, and many other prescription drugs, home-use dialysis machines, respirators, ventilators, gloves, masks, anti-bacterial hand soap and so many more. With today’s global supply chain, shortages would soon develop,” it says.

“The full effect of pandemic on inflation and deflation, and commensurate movements in interest rates, gold prices, currencies and stock prices would depend on the length and severity of the pandemic,” it concludes. “To be sure, however, this would not be the end of the world. Most likely, 95%-to-99% of the population would survive”, although demographics could shift sharply, it adds. “But all of this is uncertain — if, when, and where still remain unknowable and, in many ways, imponderable. Putting actual numbers on the loss of life, productivity, growth and development is nothing more than a guessing game. It ranges from ‘dodged that bullet’, to manageable, to bad, to disastrous, to catastrophic.”