Just how badly the H1N1 Influenza virus could affect Canada is murky at best. The World Health Organization says the virus will create a \u201cmoderate\u201d pandemic. The Winnipeg-based International Centre for Infectious Diseases says between 25% and 50% of Canadians could be affected by the so-called \u201cswine flu\u201d pandemic.
The best way for the financial services industry and advisors to deal with the uncertainty is to plan for a potentially serious scenario, experts say, because those firms without a plan risk finding themselves understaffed and unable to operate in the event of a severe pandemic
\u201cThere\u2019s more of an expectation that we do need to plan for this kind of event,\u201d says Katie Walmsley, president of the Toronto-based Investment Counsel Association of Canada<\/b>. \u201cMany firms, if they didn\u2019t have something formal in place, have been looking at that and putting something in place in recent months.\u201d
Adds Kate McNeill, an associate in the labour and employment group at law firm McCarthy T\u00e9trault LLP<\/b> in Toronto: \u201cIf you don\u2019t know what steps are going to be taken, or who is going to take the steps, then it\u2019s often very difficult to deal with when you\u2019re faced with the emergency situation. We strongly recommend that our clients have an emergency plan in place.\u201d
But there appears to be a wide divergence in companies\u2019 approaches to pandemic planning. Many large financial services firms have developed flu-fighting strategies, while other firms are not convinced that H1N1 presents a significant threat \u2014 particularly as most cases caused by the new virus have not been much more severe than strains of the seasonal flu. For this latter group, spending time and resources on preparing for a pandemic is not a priority; as a result, their plans tend to be rudimentary.
Some small companies have taken no formal precautions at all. A recent Bank of Montreal <\/b>survey of more than 800 small businesses revealed that 82% had not developed a health-related continuity plan to prepare for a pandemic.
Firms regulated by the Invest-ment Industry Regulatory Organ-ization of Canada<\/b> are required to have \u201cbusiness continuity\u201d plans in place to prepare for any type of significant business interruption, ranging from terrorist attacks to natural disasters. The Mutual Fund Dealers Association of Canada<\/b> also encourages its members to develop plans to deal with crisis situations.
Although these business continuity plans broadly cover the possibility of a pandemic, McNeill encourages firms to develop a portion of their plan specific to a pandemic because it represents such a unique type of emergency.
\u201cThey do need to take into account the impact of a pandemic and how that\u2019s different from other emergency situations,\u201d McNeill says. \u201cThe pandemic plan is a little bit nuanced, in that it deals with a health issue.\u201d
Walmsley agrees that even small firms should develop formal plans, even if they are very basic. A process for informing clients of the firm\u2019s strategy in a pandemic, she says, is especially important.
\u201cThe client aspect is an important one,\u201d Walmsley says, \u201cjust to get communication out and reassure clients how the situation is being handled.\u201d
Most large firms have incorporated pandemic strategies into their broader business continuity plans. The Canadian Bankers Association<\/b> is working with the banks to ensure that banking services will be available throughout every stage of a possible pandemic.
\u201cClearly, we need to be prepared,\u201d says Randy Garvey, executive vice president with Edmonton-based Canadian Western Bank<\/b>, which has developed a comprehensive pandemic plan that is tested annually. \u201cIf [a pandemic] does happen, we need to have, in the financial community, practices and processes in place that can provide for services in a situation in which up to 40% of your staff could be absent.\u201d
BMO is preparing for the possibility of having to operate without as much as 50% of its staff. This involves ensuring that a sufficient number of employees are cross-trained and able to fill in for workers that contribute to each critical function at the bank, says Tom Frank, BMO\u2019s director of enterprise business continuity management.
\u201cThe challenge was in reassuring ourselves that we had a level of redundancy in order to support that kind of a scenario,\u201d says Frank, who is part of a pandemic planning and preparedness team at BMO that meets regularly.
Pandemic plans at the banks also seek to ensure that clients would have sufficient access to cash. Thanks to the vast Canadian network of automated teller machines, cash would generally be accessible even if bank branches were forced to close, Garvey says: \u201cWe\u2019re pretty comfortable that we have an [ATM] network sufficient to address the needs of our customers, from a cash perspective.\u201d
@page_break@But the banks must also consider the possibility that a severe pandemic could cause a spike in the demand for cash.
\u201cWe anticipate that there could be a call for more cash. People just feel better with more cash in their pockets when things get a little bit touchy,\u201d says Frank. \u201cThat is a key concern for us.\u201d
To prepare, the banks plan to keep more cash on hand in the event of a pandemic, according to Frank. He notes that the Bank of Canada<\/b> also has planned for the possibility of having to supply extra cash in such scenarios.
Other aspects of the banks\u2019 plans include strategies for communicating with clients and employees during a pandemic, and measures that would help prevent the spread of the flu virus. The latter category includes promoting frequent handwashing, and encouraging employees to stay home when they\u2019re feeling ill and to consider getting vaccinated. (See story on page 19.)
In some regards, the electronic nature of the financial services business makes pandemic planning easier in the sector than in industries that demand more face-to-face contact.
\u201cWe have a lot of advantages,\u201d Walmsley says, \u201cin that we\u2019re very technology-dependent.\u201d
For example, the banks\u2019 online- and telephone-banking channels allow institutions to serve customers without face-to-face contact. In addition, many financial services firms already have the capability for advisors and other staff members to work from home.
Frank says that as many as 10,000 of BMO\u2019s 37,000 employees could potentially work from home in the event of a pandemic.
\u201cWe have plenty of capability there,\u201d he says, adding that the bank\u2019s financial advisors are especially mobile. \u201cThey have a capability to work from home or to plug in at other sites. The infrastructure allows them to move around.\u201d
Some smaller financial services firms, on the other hand, have not gone to the same lengths in pandemic planning as the banks and other big financial institutions.
\u201cIf we look at how many people die from flu every year, this one is not really that fatal,\u201d says Frank Wiginton, a senior financial planner with TriDelta Financial Part-ners<\/b>, a Toronto-based financial planning firm with 12 employees in three small offices. \u201cSo, we don\u2019t look at it as an urgent thing.\u201d
Although TriDelta does not have a formal pandemic plan in place, Wiginton is confident that his firm could implement an off-site work strategy quickly and easily in the event of a pandemic. He says TriDelta\u2019s employees would simply work from home rather than coming into the office.
\u201cIt can be implemented in the blink of an email, so we don\u2019t feel that we need to put a formalized plan in place,\u201d he says. \u201cWe\u2019re not really a large enough organization to spend the time putting something like [a detailed plan] in place.\u201d
Wiginton adds that all the software he needs is available on his laptop, and about 95% of his work is done over the phone, including solicitations and client contact. Even new-client accounts can be set up remotely, as the required paperwork can be sent by courier.
Although Wiginton believes that good business practices involve in-person meetings with clients at least every six months, he expects that clients would be open to conducting such meetings over the phone in a pandemic situation.
Before financial services firms allow employees to work from home, however, McNeill warns that they must consider the legal implications of such an arrangement. As advisors commonly work with confidential client information, she says, pandemic plans should account for such factors as the security of client records when advi-sors take them off-site.\tIE<\/b>
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