@Risk

A few months ago, when news about the H1N1 flu virus first hit the streets, it was only natural for all of us to focus initially on our health and the health of our families and friends.  But, very soon afterwards, we were also forced to consider potential broader implications: What would be the impact of a flu pandemic on the global economy and each of our individual spheres of professional responsibility?

For example, anyone with the responsibility to assess supply chain risk must confront the question of how to categorize this new threat.  Most other large scale unanticipated risk events, such as natural disasters or geopolitical crises, tend to have a limited geographical scope, and therefore their effects can be mitigated through careful management on the sourcing side.  Even the recent global financial crisis appears to have some safety valves in terms of accurate assessments of the financial health of critical suppliers.  Sure, there is still much work to do in building supply chain practices that monitor and mitigate these types of risks, but at least there is a picture that can be painted, a path that can be laid out.  That’s not the case with a risk like H1N1.

The impact of a global flu pandemic is still relatively unclear.  Pieces of it look similar to other localized supply disruptions – a spike in flu cases in a factory town might cause the schools to close and all the workers to stay home, e.g.– but the global impact could result in an overall situation that combines the worst elements of multiple localized risk events with a global event on the scale of the recent financial crisis.   The limited spread of H1N1 in early 2009 has led to a manageable impact on supply chains, although the possibility of a much broader problem in the next flu season may call for a unique level of comprehensive supply chain risk planning specific to this one event.