No Swine Flu Emergency Yet, but Banks Should Keep Eyes Open

The swine flu scare hasn't reached pandemic proportions at this point. However, that hasn't stopped people and the markets from panicking slightly. Just today, someone working for Ernst & Young in New York was reported to have had swine flu. And stocks are still a little jittery as news of the scope of the disease continues to be broadcast.

"It doesn't take much to get a reaction out of the market during these uneasy times," James Kerr, president and managing partner with Cromwell, Conn.-based Best Practices Enterprise Group, told BS&T. "It's unfortunate that the markets reacted to this because these isolated outbreaks have had little impact on business throughout the world. If it reaches pandemic proportions, yes, some businesses will be in jeopardy. But, as of the moment, calmness should prevail as businesses do what they need to do to prepare for contingency operations."

Although it's not yet time to push the panic button, it is still important for banks to monitor something like the spread of swine flu closely and to take stock of their disaster recovery plans. Today's situation is reminiscent of what happened during the bird flu scare just a few years ago, Kerr comments. "I don't see any major differences in the way businesses have reacted to this compared to the bird flu scare. Most firms took little action then. I don't think this scare will make them take any more action now." This kind of complacency can be dangerous. Kerr senses some banks might think the contingency plans they developed to handled Y2K, for example, are adequate. This is not the case, he asserts, since the steps a bank would take in the event of mass computer outages differ greatly when compared with what must be done if workers are unable to report to the office. "A few years ago many firms built contingency plans to handle a Y2K catastrophe scenario, such as electrical outages, water outages and transportation problems. So, they think that they can just dust those business continuity plans off if a pandemic strikes. But, here again, the Y2K scenario and what you do about it is much different than one where workers can't work. Certainly, many organizations have done it right and have built pandemic-specific business contingency plans. But, many others have not."

Based on what he has seen from the research, Kerr is inclined to believe it isn't a question of "if" but "when" when it comes to a worldwide flu pandemic. "The problem is most of us choose to ignore these kinds of warnings and most of the time we do just fine," he comments. "But, I advise my clients that it is far wiser to make an investment in planning for this (even if it never happens) because the cost of planning is a lot less than the cost to the business if it gets caught without a plan."

And the consequences of being sideswiped by any pandemic vary. According to Jeff Margolies, a security expert and senior executive with Accenture in New York, it's fine if banks tell their people to telecommute to prevent the spread of the disease, but they may underestimate the capacity of their systems to handle such a shift in usage.

"We may see bank employees elect to--or told to--work from home to reduce potential exposures to the virus. This presents two potential challenges," Margolies explains. "First, many banks do not have sufficient bandwidth or capacity to handle the external usage requirements of having high numbers of employees work from home. Second, a bank may not have enough resources on hand at a data center to fix a critical system problem, in which case systems could indeed stop. This issue could be magnified if a bank's data centers are not spread out geographically."