The Imperfect Storm

As more and more cases of swine flu are diagnosed in Mexico and the United States, a quiet and surreal panic permeats throughout the business world.

This morning, ABC, had Dr. Oz on both GMA and the View. His demeanour on GMA was very different to how he appeared 3 hours later on The View. On GMA, he was not his composed relaxed self. The circles under his eyes were very pronounced and he seemed stressed.

Dr Oz is probably the best known medical doctor in the United States and Canada. He, along with Dr Roison authored “You, The Owners Manual” books, is the force behind the popular website http://www.realage.com/ and with his frequent appearances on Oprah, is now a household name.

With his fan base of millions of viewers, he is perfect as the designated spokesperson for ABC with reference to this flu. His message of don’t panic, was clear. This was not altruistic of ABC’s part but proactive. Their parent, Disney owns theme parks and holiday resorts through out the world.

The speed of the spread of the flu is proportionate to the decrease in the stock prices of companies in the airline and hospitality industries. Today was a difficult day for those stocks.

Timing of this imperfect storm could not be worse. Canadians have vivid memories of the devastating impact SARS had on Toronto’s economy in 2003. Conferences and conventions were cancelled which brought down hotel occupancy rates to approximately 50%. Revenue at related industries driven by the cancellations, also diminished. Sporting events, shopping malls, cinemas, charity events even churches reported substantially reduced traffic. In general, the economy in Toronto was good and the city was more than able to weather it.

After 9-11, large companies in an attempt to be proactive researched and wrote up disaster plans, to be implemented should there be a need. Unfortunately, in my experience, there are many companies who do not have a plan of action, should one be necessary and the plans at large companies are outdated.

Today’s economy is considerably different, from Toronto’s in 2003. Consequences of a panic, let alone pandemic would be considerable and far reaching. The potential decrease in consumer purchasing of non essential items will lead to deflationary pricing, which in turn will prolong the recession or, depending on the length and depth, convert to a depression.

The present WHO, Global Pandemic Alert Level is at 3. The concern will accelerate should it be raised.