The threat of pandemic is arguably the biggest risk facing the human population today, and was the subject of a seminar held at Lloyd’s on 24 April in conjunction with XL Capital. Speakers from the Metropolitan Police, the Fire Service and the Department of Health came together to discuss their preparations for a pandemic outbreak, and provide guidance for the financial services and insurance world. Seventy-nine percent of attendees strongly agreed that the threat of a pandemic is the highest civil threat currently facing the capital. Only 28% disagreed and 4% didn’t know.
A pandemic is an infectious virus that spreads causing a worldwide epidemic. To be classed as a pandemic, the disease must be a new one that has not yet affected the human population and to which humans have no immunity. A pandemic will come in waves which could last around 15 weeks, with two or more waves taking place. A pandemic could potentially affect the whole world, resulting in the disruption of many things that we take for granted, for example transport routes, schools and hospitals.
The last big pandemic was in 1918 and killed 25 million people worldwide, despite only lasting 18 months. Statistically, the world is due another pandemic, although no one can predict how or when it will strike.
Thomas Dunbar of XL Capital is certain that the threat of a pandemic is the most serious threat currently facing the capital: “There are numerous and very differing civil threats that face London but pandemic is the widest ranging with the greatest potential impact. A pandemic will affect every type of emergency responder throughout the city in very similar degrees with similar challenges.”
The nature of the response to a pandemic is vital, says Dunbar: “The effort to respond will need to be seamless and viewed as faultless by Londoners in order to ensure the city continues to function and that citizens will remain confident. Planning for a response as large as that required for a pandemic must be completed on a coordinated, cross governmental basis if it is to be done properly. For plans to be successful, it must be recognised as the highest threat.”
Mark Hughes, Group Director at BT, says that knowing your supply chain is crucial for a business to be able to continue its operations throughout a pandemic: “Look deep into the supply chain - your ability to sustain may only be as good as your supply chain's ability.”
Attendees were also asked whether the insurance industry needs to do more to prepare for a pandemic. Sixty-eight percent felt that there was more work to be done, while only 28% felt that current preparations are adequate. Again only 4% weren’t sure.
Lloyd’s Emerging Risk Manager Trevor Maynard feels that the insurance industry will feel the impact of a pandemic, although the extent remains to be seen.
“Some insurance classes will be clearly affected (life, health, event cancellation, travel insurance for example); for others the situation is less clear (medical malpractice, D&O, 3rd party liability for example).”
Maynard believes that all companies should be using business continuity plans to prepare against a pandemic: “All companies should prepare carefully for shocks to their business continuity. Pandemics give particular challenges due to their protracted nature, impact on employees’ personal lives and those of their families and on travel issues. Companies should consider carefully how their standard plan (including HR and IT) will need adjusting to cope with a pandemic.”
The engagement of organisations like Lloyd’s and XL Capital in preparing for a pandemic is clearly rated highly - 96% of attendees at April’s event feel that they can play a valuable role in facilitating debate on major risks.
