What SARS and Ebola outbreaks teach business about deadly pandemics

Involvement in prevention, detection and response to emergencies is a sound investment for corporate world

In a visionary World Economic Forum (WEF) monograph titled “Outbreak Readiness and Business Impact”, then Global Fund head Peter Sands recalled: “During my time as CEO of Standard Chartered I saw first-hand how infectious disease outbreaks like SARS, Mers and Ebola could wreak havoc on business. Customers avoided public places such as restaurants, shops and cinemas. Staff struggled to get to work, fearful of public transport and needing to look after their children once schools were closed. Supply chains and basic services faltered, as pressures and blockages built up.”

Effective risk management is key to successful business but, as Sands pointed out, Standard Chartered at the time lacked the information tools and tried-and-tested interventions to deal with infectious disease outbreaks, particularly those with epidemic and pandemic potential. They were “making things up” as the crisis moved along.

No business, especially those with global supply chains and markets, can operate with such uncertainty and, pressured by the compelling discipline of meeting the bottom line for investors, Sands and his colleagues laid out a case for a far greater level of business involvement in the prevention, detection and response to outbreaks.

A year later, the world of modern business, only some of whom paid heed to Sands and his colleagues, is discovering how brutal it can be, when a novel virus named SARS-COV-2 spills over into an immunologically naive human population and rips apart our personal, social and economic arrangements. The effect on human lives and health will be staggering, though how severe exactly cannot be told at this time.

The economic impact, political economist Robert Muggah observed, could be “losses of 1%2% of global GDP this year. In the short term we can expect a recession and there’s a good chance we’ll see a depression by 2021.”

Prophetically, Sands and his colleagues spelled out in January 2019 what many of the world’s biggest companies experienced a year later with the Covid-19 outbreak.

EFFECT ON EMPLOYEES

Infectious disease outbreaks will affect productivity, drive absenteeism rates and medical insurance costs. Health-care costs are a significant component of operating costs. Outbreaks will limit business travel between headquarters, regional offices, suppliers and customers, compromising relationships. Companies will wish to limit workplace disease transmission and encourage contagious employees to stay at home and therefore need to design medical insurance options and telecommuting systems to enable work to continue.

CONSEQUENCES FOR SUPPLY CHAINS

Infectious disease outbreaks disrupt international supply chains. Just-in-time manufacturing allows for small volume on-site inventories and relies on low defect rates, but these very characteristics of modern globalised business rely on suppliers that can deliver rapidly and on scale, rendering them extremely vulnerable to disruptions. To manage the risk requires comprehensive high-resolution geographic and time information, and businesses have an interest in investing in the capacity to acquire such surveillance.

EFFECT ON CUSTOMERS

Widespread death and disease associated with severe disease outbreaks will affect many companies. Just consider the retail sectors. Even outbreaks with low infection rates and the fear of infection will depress retail and reduce entertainment spending. Customers will turn to ecommerce instead of traditional shop retail, affecting distribution models. Some companies are better able to adjust than others.

Sands used epidemic outbreaks as examples to make his case, but the argument applies to any disaster or catastrophic event. In SA the most telling example of why businesses should invest in better disaster prediction, detection, mitigation, response and recovery was the Cape drought and water shortage catastrophe of 2014-2016, which is more than likely to recur. Many businesses were affected, the tourism, agriculture and shortterm insurance sectors most directly.

Statistics provided by Western Cape tourism, trade and investment promotions entity Wesgro showed a drop of 1.5-million tourists between 2014 and 2015 (from 10-million in 2014 to 8.5million in 2015). Airline and hotel bookings dropped, and tourism-related job growth stagnated between 2014 and 2015. While the tourism market recovered and showed great resilience after the end of the drought, the longerterm effect was a sharp 12% decline in jobs from 198,417 in 2016 to 174,893 by 2018.

The Covid-19 outbreak will dwarf in scale the human and economic effect of Cape Town’s drought. But it adds urgency to the call on business leaders to adopt a new risk approach and mindset. Business leaders should better position their organisations to avoid exposure and they should respond effectively to support global health security. Companies should extend risk management beyond medical responses to employees, important as that is, to include the securing of operations, supply and distribution channels, managing relations of trust with employees, customers and investors, engaging in advanced logistical planning and developing plans for pre-emptive communications.

As Sands and his colleagues point out, actions that are to be taken should be incorporated into routine risk management practices. Beyond their individual companies, they can also leverage resources and influence through chambers of commerce and business associations and invest, for example, in the dynamic fields of climate science at local universities, national disease detection and surveillance entities such as case of SA the National Institute of Communicable Diseases (soon to become part of the new National Public Health Institute of SA), regional bodies like the Zambia-based regional public health operations of the Africa Centre for Disease Control, and nongovernmental organisations such as the Red Cross and Médecins Sans Frontiers as well as the many more local nongovernmental organisations involved in emergency response.

Supporting Africa-wide initiatives is vitally important. The domains of infectious disease and biological outbreaks recognise no national boundaries. SA companies have a substantial footprint on the continent, a presence that is likely to expand.

In the Brenthurst Foundation’s “Vital Signs: Health Security in SA”, Jonathan Daven, Michael Kahn and I argue that “given their exposure to disasters and catastrophes, it is in the self-interest of SA business to invest in surveillance, epidemiological and climate services, as well as in medical countermeasure pipeline developments, to enable countries in which they operate to mount a continuously improving and far more effective menu of interventions to prevent, detect and respond to disasters”.

Fortunately, there is a ready-made entity to place the investment: the Africa-CDC, led by the distinguished virologist John Nkengasong, launched the Africa Public Health Foundation (APHF) in February. Modelled on the Atlantabased CDC Foundation, the APHF is a publicprivate partnership project between the AU and the WEF with the goal of drawing in private sector companies into scaled-up public sector epidemic detection, prevention and response across the African continent.

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James, a former dean at the University of Cape Town, is a visiting professor at Columbia University and editor and co-author of ‘Vital Signs: Health Security in SA’.