The global turmoil caused by the swine flu outbreak has thrown into sharp relief the need for organisations and companies to have well-established business continuity plans.
But according to human behaviour experts at Leeds University Business School, the sheer unpredictability of people and overoptimistic forecasts means many organisations may need to review these plans.
"Despite the best efforts of the Department of Health and other agencies to present the facts, people will not always behave in line with the available evidence", says John Maule, Professor of Human Decision Making and Director of the Centre for Decision Research at the School.
Two factors in particular make it difficult to predict how people will react. The first is that people can overestimate the risks involved and so respond in ways that are inappropriate and disproportionate; the second is that the herd instinct becomes particularly prevalent in stress situations. It is a potent combination that can be observed in phenomena such as panic buying.
For businesses, this unpredictability makes it difficult both to regain stability in response to emergency situations, and to forecast likely responses to any action they take. Businesses can suffer from some common mistakes in their planning.
Prof Maule says: "Organisations will tend to think too narrowly, fail to anticipate how others will react, and hold predictions with unreasonably high levels of confidence."
The view is shared by Michael Charlton-Weedy, Chief Executive of the Cabinet Office Emergency Planning College (EPC), which is the Government's emergency training organisation. He says: "In times of stress, people tend not to look upward, outward and in broad strategic terms, but become more introspective and narrowly focused on details."
There are some clear implications for continuity planning. Plans need to look broadly at the consequences of risk, rather than focusing on the risks themselves. This generic approach means that while there may be significant differences in people's perception between a company suffering a terrorist attack and one falling victim to a flood, the consequences in business interruption can be very similar.
"Organisations need to look at a broad range of possible scenarios and identify the strategy that has sufficient flexibility to deal with them", says Prof Maule. "However, the judgment on what constitutes the best strategy has to be based on what is the most robust, rather than what delivers the greatest financial return, which can be difficult for some companies to swallow."
Plans also need to take account of time delays between decisions being made, and the consequences of those decisions taking effect. Whilst the greatest risk from a pandemic is the loss of key people, businesses need to consider not only how to limit infection of the workforce, but also the effects of losing people who may not themselves be infected, but who are required to take time off work to care for those who are.
For some organisations, size matters in continuity planning. And paradoxically those with greater need may be giving the issue less focus. Whilst many global corporations have well established continuity plans, small and medium enterprises (SMEs) have fewer resources to devote to them. And yet the consequences for SMEs are potentially greater - with more responsibility concentrated in fewer key people and less flexibility to switch production or operations to other premises, an emergency really can spell the end of the line for the business.
Effective communication is a pre-requisite of any organisation's continuity planning. It is essential to identify key stakeholders and determine how they will be kept informed, and communication must be pro-active rather than reactive. However this is another area where human behaviour can produce unanticipated consequences, as people's level of trust in the organisation will determine the extent to which they view the messages as credible.
For further information:
Please contact the University of Leeds Press Office on +44 (0)113 343 4031 or email email@example.com
Notes to editors
The Emergency Planning College works in partnership with Leeds University Business School to develop and deliver education and training in all aspects of risk, emergency planning and management, business continuity and public safety.
The College trains some 7,500 students annually drawn from the public and private sectors at its site in Easingwold and at venues throughout the UK and in 12 countries overseas.