Banks and avian flu: planning for a possible pandemic

Many of the assumptions underlying much of today’s business continuity planning will not hold in a pandemic. Pat McConnell explains.

Abstract
An avian flu pandemic would fall under one of the four categories of ‘operational risk’ defined by new Basel II banking regulations, specifically an ‘external event’. As such, banks and other regulated financial institutions are required to maintain regulatory capital to cover the financial losses that might arise from such an event, and are also required to maintain and test business continuity plans that would aim to mitigate the impact of such an event.

Business continuity planning has become an established and respected discipline in all financial institutions, increasingly integrated with other Operational risk management functions. However, many of the assumptions underlying BCP planning today, based as they are around catastrophic scenarios such as 9/11, where premises and systems are suddenly knocked out of action, will not hold in a pandemic!

In a pandemic, it will be people rather than infrastructure that will become unavailable. And it is the largest firms, with multiple overseas offices and highly centralised support functions, which will be most at risk.

This paper is one of the first to study the potential impact of an avian flu pandemic on the operations of global banking industry and is designed to encourage critical thinking on this serious topic. As a starting point, the paper proposes practical steps for beginning to understand the operational risks resulting from a pandemic and to develop business continuity plans to mitigate the detrimental impact of such a catastrophe.

Read the paper (PDF)

•Date: 20th October 2005 •Region: World •Type: Article •Topic: Operational risk man.
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