Three thousand banks recently participated in trying to assess the impact of a pandemic on their operations and determine what they could do to cope. The results make for sobering reading, yet is it doubtful that organizations that were not involved in this program will take heed.
While the financial services industry is making contingency plans, it appears to be virtually alone. And the most troubling issue is that the health care providers, who have the most important role to play in this type of emergency, are sorely lacking in spare capacity. One of the most intractable problems is the way hospital beds has been cut over the years as medical insurers pressure doctors and administrators to discharge patients as quickly as possible. As a result, the US lacks any slack to cope with a real disaster.
If a pandemic strikes the U.S., it will kill about 1.7 million people, hospitalize 9 million, exhaust antiviral medications and reduce basic food supplies, according to a planning scenario developed by financial service firms preparing for such a catastrophe.
This particular disaster occurred only on paper. But those grim numbers are some of the pandemic planning assumptions used by nearly 3,000 banks, insurance companies and security firms in a just-concluded, three-week, paper-based exercise that may have been the largest pandemic test of its kind….
During the height of the pandemic, which was estimated to occur midway through the scenario, participants were asked to consider operating with an absentee rate of nearly 50% — above the 35% to 40% rate federal officials believe may actually happen, said Hender. “We deliberately took the rate up much higher to see where their stress points were,” he said….
The U.S. Department of Treasury is also a sponsor of the test, and Valerie Abend, deputy assistant secretary for critical infrastructure protection and compliance at the department, said the financial services industry has been “thinking long and hard about a pandemic.”
“We are one of the most prepared, I would argue, if not the most prepared of the critical infrastructures that are out there,” said Abend.
But the financial services firms won’t really know how prepared they are until the end of the year. The thousands of pages of data collected during the test, which began in the last week of September, are still being analyzed and a final report is due at year’s end. But based on some preliminary feedback from participants, the financial service firms weren’t handing out too many gold stars for readiness.
When asked “based on the lessons learned from the exercise, how effective are your organization’s business continuity plans for a pandemic,” 56% answered “moderately,” the next highest group was “minimally,” at 28%. Only 12% said their business continuity planning was very effective.
The three-week scenario compresses the 12-week period a pandemic wave would likely last. Among the other things that may happen in an actual pandemic are school closings, as well as blackouts or brownouts in major metro areas because of degraded service as a result of absenteeism. Internet service throughput could be reduced by 50% due to congestion, and Web browsing timeouts would become common. Airlines would cut schedules, and garbage would pile up on streets.
Many frustrations would arise. Working ATMs might be scarce, and call centers may not have enough staff to help. Health insurance claim volume would rise 20%. Auto claims are expected to fall 10%, since there would be less traffic on the road. But for those who are driving, gas prices would be high and fuel supplies reduced.