By Ruth Razook,Founder & CEO
RLR Management Consulting, Inc.

According to the World Health Organization, a pandemic results with the emergence of a disease new to the population that infects humans and causes serious illness, and which spreads easily and sustainably.

There have been a number of significant pandemics throughout history and major influenza pandemics in 1918, 1957, 1968 and most recently, 2009. Now there is another pandemic, the Coronavirus (COVID-19). Overall, the WHO estimates that the mortality rate for COVID-19 is between 2% and 3%, although that could change as the situation develops. That’s much lower than SARS, which the WHO estimates has a mortality rate of around 9.6%, and MERS, which the WHO estimates has a 34.4% mortality rate.

We continue to learn lessons from significant and disruptive disasters such as the California wildfires in 2018 and the hurricanes of late, as well as from localized disasters that include earthquakes, floods, and power outages. Strides have been made to develop and implement contingency plans and strategies that ensure a bank’s most critical activities are recoverable in a short period of time. Banking processes are highly automated and recovery strategies generally involve back up systems and alternate processing sites.

In March 2006, an Interagency Advisory on Influenza Pandemic Preparedness was issued in Press Release 30-2006 (3/15/2006) and FIL-25-2006 to raise awareness regarding the threat of a pandemic influenza outbreak and its potential impact on the delivery of critical financial services. Reference was made to the National Strategy which states that the “private sector should play an integral role in preparedness before a pandemic begins and should be part of the national response.”

How does a pandemic differ from other disasters?

The most significant difference between a pandemic and other forms of disaster is that a pandemic is expected to affect worldwide populations, and 15 – 35% of the U.S. population (at one time). Illness rates are expected to be 2 – 5 times higher than a typical influenza season, resulting in a substantial decline in workforce. High morbidity and mortality rates are expected.

There will probably be no damage to buildings or technology; however, an area could be quarantined. Critical vendors and suppliers may not be able to provide support due to high employee absenteeism or inability to travel.

Generally, a pandemic is not a one-time event that is over and done with. The disease can spread or be activated over weeks and months.

Over what timeframe would a pandemic occur?

Experts estimate a pandemic will occur in waves (bell-curve) with a 3% daily increase in the number of cases until the peak number is reached, after which the number of cases will decrease at a daily rate of 3%. It is expected that a number of workdays will be lost due to adult working parents who will need to care for children, an adult partner, or elderly parents.

A single wave is estimated to last four weeks. The peak would occur at two weeks with an estimated loss of up to 35% of the workforce at that time. If the pandemic spreads more quickly than experts estimate, or if multiple waves occur, the peak number of infections may be greater, and the peak “surges” will continue over time.

The impact of two or more waves of pandemic, over a period of weeks or months, should be considered in disaster planning.

As an employer, how can I estimate the number of staff who will be available to work during a pandemic?

In general, experts say that employers should make contingency plans to operate during the pandemic period with at most 85% of staff and between 50% and 65% during the peak of the pandemic. This assumption includes an estimate of workforce absent due to school closure, a gross clinical attack rate, ill workers losing an average 7 workdays, and that for every person remaining in the workforce who gets ill, another person will stay home to look after a spouse, children, parents or otherwise decline to travel or work.

How can we adjust our contingency plan to incorporate the possibility of a pandemic event?

A Business Pandemic Influenza Planning Checklist is available for download at

https://www.cdc.gov/flu/pandemic-resources/pdf/businesschecklist.pdf.

The checklist contains the following tasks:

1. Plan for the impact on your business
   1. Identify a pandemic coordinator and team with defined roles and responsibilities
   2. Identify essential employees and critical inputs
   3. Train and prepare ancillary workers (consider retirees, cross-training)
   4. Develop and plan for scenarios likely to result in an increase or decrease in demand for products and services (for example, cash)
   5. Determine impact on company financials
   6. Determine impact on business-related travel
   7. Find up-to-date and reliable information (public health, emergency management)
   8. Establish and maintain an up-to-date emergency communications plan (calling tree)
   9. Test the plan
2. Plan for the impact on employees and customers
   1. Forecast employee absences due to personal illness, care for family members, quarantines, school closures, lack of public transportation
   2. Implement guidelines to modify the frequency and type of face-to-face contact (handshaking, meetings, shared workstations)
   3. Evaluate employee access to and availability of healthcare services during a pandemic
   4. Evaluate employee access to and availability of mental health and social services during a pandemic
   5. Identify employees and key customers with special needs
3. Establish pandemic policies
   1. Establish policies for employee compensation and sick-leave absences due to a pandemic, including policies on when a previously ill person is no longer infectious and can return to work
   2. Establish policies for flexible worksite (telecommute) and flexible work hours
   3. Establish policies for preventing Coronavirus spread at the worksite (respiratory hygiene / cough etiquette, exclusion of people with Coronavirus symptoms)
   4. Establish policies for employees who have been exposed to pandemic Coronavirus, are suspected to be ill, or become ill at the worksite
   5. Establish policies for restricting travel to affected geographic areas, evacuation of employees working in or near an affected area when outbreak begins, and guidance for returning to areas of previous infection
   6. Set up authorities, triggers and procedures for activating and terminating the response plan, altering business operations, and transferring business knowledge to key employees
4. Allocate resources
   1. Provide sufficient and accessible control supplies (hand hygiene products, tissues and receptacles for their disposal) in all business locations
   2. Enhance communications and information technology as necessary to support employee telecommuting and remote customer access
   3. Ensure availability of medical consultation and advice for emergency response
5. Communicate and educate
   1. Develop and disseminate programs and materials covering pandemic fundamentals (signs and symptoms, modes of transmission, response strategies)
   2. Anticipate employee fear and anxiety, rumors and misinformation and plan communications accordingly
   3. Ensure that communications are culturally and linguistically appropriate
   4. Disseminate information to employees about the bank’s pandemic preparedness and response plan
   5. Provide information for at-home care of ill employees and family members
   6. Develop hotlines or website for communicating pandemic status and actions to employees, vendors and customers inside and outside the worksite
6. Coordinate with external organizations
   1. Collaborate with insurers, health plans, and major local healthcare facilities to share plans and understand their capabilities and plans
   2. Collaborate with federal, state and local public health agencies and emergency responders
   3. Communicate with local and or state public health agencies about the assets and/or services your bank could contribute to the community
   4. Share best practices with other businesses in your communities, chambers of commerce, and associations to improve community response efforts

Planning takes time. Are there steps we can take right now to ensure we’re moving in the right direction to address a pandemic event?

• Check that your existing Disaster Recovery and Business Continuity Plan are applicable to a pandemic and that core business activities can be sustained over several weeks
• Identify essential functions and the individuals who perform them.
• Train and cross-train staff to ensure that essential functions can be performed in the event of an absentee rate of 25% to 30%
• Maintain a healthy work environment by encouraging hand and respiratory hygiene
• Determine which outside activities are critical and develop alternatives (for example, outside sales calls)
• Where feasible, expand the worksite to include work from home with appropriate security and network access
• Expand online and self-service options for customers
• Determine if communications methods are working, can be improved, and that contact lists are up to date
• Update sick leave and family and medical leave policies and communicate with employees about the importance of staying way from the workplace if they become ill

Will the regulatory agencies expect that Disaster Recovery and Business Resumption Plans include a pandemic response?

FIL-14-2020, issued March 6, 2020 states:

The potential effects a pandemic could have on an institution justify establishing plans for how each institution will manage in that operational environment. Recent events highlight the importance of institutions being ready to execute these plans should conditions necessitate.

Institutions should be reviewing business continuity plans and executing prudent initial actions, such as:

• Promoting employee awareness by communicating the risks of a pandemic outbreak and discussing the steps employees can take to reduce the likelihood of contracting an illness;
• Identifying and prioritizing essential functions, employees, and resources within the institution and across other business sectors for operational continuity purposes; and
• Testing roles and responsibilities of management, employees, key suppliers, and customers; key pandemic planning assumptions; increased reliance on online banking, telephone banking, and call center services; and remote access and telecommuting capabilities.

This guidance updates the contents of FIL-6-2008 dated February 6, 2008, titled “Interagency Statement on Pandemic Planning: Guidance for Minimizing a Pandemic’s Potential Adverse Effects,” and supersedes FIL-25-2006, dated March 15, 2006, titled “Interagency Advisory on Influenza Pandemic Preparedness.”

RLR Recommendation – Perform a Risk Analysis

1. Determine which banking activities and functions will be critical in the event of a pandemic, based on your products, services, customer base and geographic locations (for example, internet banking functions, call centers, and ATMs may have unusually high volumes if people avoid face-to-face contact)
2. Determine which external activities will be critical to support the bank’s critical functions (for example, telecommunications, cash, ATM service providers)
3. Determine which staff members are critical to ensure identified banking activities and functions can support current and increased volumes
4. Consider that internal and external resources may be reduced from 15% to 30% during a pandemic and strategize recovery options (cross-training, retirees, staff from less critical departments and functions, alternate external providers)
5. Determine the impact of “loss of business” and “cash needs” on the bottom line and consider if current recovery strategies and liquidity reserves are adequate
6. Discuss the human factor and whether employees will or will not be compensated for time lost to illness or care of a family member and determine the impact. Remember, sick employees will come to work if they fear a loss of income
7. Update contingency plans and strategies to incorporate the results of your risk analysis

References for this article include:

World Health Organization www.who.int
Centers for Disease Control www.cdc.gov; www.pandemicflu.gov
FIL-14-2020 www.fdic.gov