With 15 new cases of bird flu diagnosed in Turkey,
and one Indonesian death from the disease in the last couple of
days, talk of a flu pandemic looks just as likely to dominate 2006 as
it did 2005. But how prepared are Australia’s public
companies for a bird-flu outbreak given their obligation to shareholders to plan for these sorts of contingencies?
Internationally, HSBC, the world’s third largest band, has announced
that it’s preparing a contingency plan for an employee absentee rate of
50% – double the rate the World Health Organisation suggests companies
plan for. The Financial Times has reported the bank’s decision,
which runs counter to many other estimates about the scale of a bird
flu outbreak, with HSBC crisis management expert, Bob Piggott, declaring
the company would rather be safe than sorry. Advice some Australian companies would do well to take on board.
Ok, so the risk of a bird-flu pandemic is
still relatively small. The WHO estimates
there’s a 10% chance that the virus will mutate into a form able to be
transmitted from human to human in the next two years, and even that
less-than-likely event is still two steps away from the disease
becoming a pandemic.
But any sort of outbreak, even one that falls short of a pandemic, has
the potential to hit the bottom lines of companies that rely on
international travel pretty hard. Obviously at greatest risk are the
airlines, and Qantas has developed a
“special management team” – according to a spokesperson – to keep an
eye on bird flu developments worldwide.
Hayden Long, media spokesperson for Flight
Centre, told Crikey the company was in a position to battle any
unexpected disaster, although it didn’t have a plan written up to
tackle a bird flu crisis, and doesn’t expect to create one. “As far as
specifically for bird flu, no. But Flight Centre has always kept a lot
of cash in reserve,” he told Crikey. “Historically it’s served us well,
for things like September 11.”
Long estimates the company has around $400 million in reserve cash
stored away – a small portion of which is clients’ money, but the
majority of it is free for use in the case of an unexpected downturn in
SARS has provided a blueprint for how to deal with a large disease
outbreak within Asia, but some business associations are concerned
(namely the Australian Industry Group) about Australian companies’ preparedness for a worldwide disaster.
“I don’t have much confidence that they have thought about it too much
yet,” Professor Ernie Jordan, from the Macquarie Graduate School of
Management told Crikey yesterday. He said many
Australian business leaders were notoriously cowboy-like when it came
to setting up procedures to help keep a company running smoothly
when a crisis hits.
“I don’t think the shareholders will be the slightest bit interested,”
Jordan told Crikey. The ones really keeping the bastards honest,
according to Jordan, will be the corporate governance auditors, making
sure there is an adequate risk assessment weaved into public companies’
In their annual report
last year, Qantas CEO Geoff Dixon and Chairman Margaret Jackson
outlined the main challenges to the business in 2006 they thought to be
beyond their control: fuel costs, security costs and increased
competition – but strangely not bird flu.