Guy Morgan, Director, Advisory Services, BSR
In the early 2000s, severe acute respiratory syndrome (SARS) broke out in China’s Guangdong Province, where the virus spread to humans from bats and other animals held in local outdoor markets. News stories at the time reported that the disease had spread globally due to air travel, with an American businessman succumbing to the disease while en route to China from Singapore. In the end, according to the World Health Organization, SARS was responsible for more than 750 deaths.
More recently, according to the U.S. Centers for Disease Control and Prevention, Middle East respiratory syndrome, or MERS, has resulted in at least 50 casualties, and researchers speculate that the virus originated in bats. In a similar way, avian flu has been spreading through Asia since 2003, Europe since 2005, and, more recently, Africa. The H5N1 strain is of particular concern because it has the potential to mutate and more easily affect humans.
Given the nature of our large, distributed supply chains and of business networks facilitated by easy air travel, we are exposed to new and emerging health risks in ways few would have imagined just 20 years ago. These health risks also present significant business risks given the potential costs associated with addressing them. According to one study, just the threat of avian flu in early 2006 resulted in the loss of almost US$350 million to the Indian poultry industry due to the mass culling of chickens. At the time, India did not have a viable poultry traceability system, so it was easier to kill the birds and lose the money than risk spread of the disease.
Typically, food and agricultural sectors have focused corporate responsibility strategies on risks upstream in their supply chains—focusing on upholding the core International Labour Organization conventions, for example, or helping farmers use more sustainable techniques to reduce the environmental burden of crop production.
It’s less common for these companies to anticipate risks such as how the spread of disease might affect the value chain downstream as a direct consequence of their upstream operations. But given what we know about how diseases are mutating and spreading from animals to humans, companies are beginning to map health risks and craft strategies to address potential issues. These strategies might entail developing new sources of supply, changing transportation hubs and routes, or relocating personnel, all of which would involve significant costs.
Ultimately, these health risks—and how they are handled—could affect companies from all sectors, which begs some interesting questions: When does a local disease risk in a remote supply chain become a global public health risk? And what’s the responsibility of companies across the food, airline, hospitality, and logistics sectors to work with governments and public health organizations to anticipate and address new diseases?
We’ll be discussing these and other questions at the BSR Conference 2013 in our session on “Networks Gone Wrong.” Join us to learn about these trends and how some companies are working to minimize this risk exposure.