February 5, 2020 / 9:09 PM / 21 days ago

INSIGHT: Business continuity challenges and considerations for the 2019 novel coronavirus

Hong Kong/Canada/New York (Thomson Reuters Regulatory Intelligence) - Private organizations and government agencies are scrambling to implement business continuity planning (BCP) measures for the 2019 novel coronavirus, an infectious disease that came into broader public knowledge mere weeks ago.

A man wearing a mask is seen at Lujiazui financial district in Pudong, Shanghai, China, as the country is hit by an outbreak of a new coronavirus, February 3, 2020.

To date, more than 17,000 confirmed cases of the novel coronavirus have been documented worldwide, with the majority of the cases clustered in Hubei province, China. To try to curb infection rates, the Chinese government has implemented social distancing policies which have substantially slowed business activity in the region. Other countries are increasingly implementing ad hoc measures, including travel restrictions and quarantine measures, to prevent an outbreak from occurring in their respective jurisdictions.

Developments are unfolding at an accelerated pace and organizations have much ground to cover in BCPs. The maintenance of operational agility, succession planning and employee morale are just some of the main considerations at play.

RECENT DEVELOPMENTS

In mainland China, the Chinese government has extended the Chinese New Year holiday through February 2, to encourage social distancing to mitigate the spread of the virus. Provincial and national regulators have issued guidance for employers regarding employee rights and entitlements to remuneration during this time. Uncertainty regarding the interpretation of these regulatory notices has caused confusion over whether some business continuity practices, such as requesting employees to use vacation days during the extended holiday, are legal.

Enterprise Singapore, a government agency, has issued a guide{here} on business continuity planning for the novel coronavirus. The guide recommends that businesses appoint a designated manager to oversee coronavirus-related business continuity measures. The importance of succession planning for key personnel in addition to senior managers, including communications, human resources and operations staff is heavily emphasized. Businesses are also advised to establish alternate teams for critical operational functions and to keep these teams physically segregated at all times.

In practice, segregating teams may require businesses to place extensive restrictions on employees, even outside working hours. For example, the South China Morning Post, an English language newspaper in Hong Kong, established separate workspaces for alternate teams in different districts of the city during a regional outbreak of Severe Acute Respiratory Syndrome (SARS) in 2003. Alternate teams were sent to work in different locations and were prohibited from having any physical contact with members of the other team during and after work hours for a period of three months.

Many companies in Hong Kong have activated extensive BCPs for the novel coronavirus in comparison to jurisdictions with similar numbers of confirmed cases, partially due to containment measures from the local government, lessons learned during the SARs outbreak and the region’s close proximity to mainland China. Measures that have been implemented include remote working arrangements for a large percentage of the workforce. Some companies have provided personal protection supplies such as surgical masks and hand disinfectant for employees who have to come to the office to perform their job duties. Policies suspending business travel to cluster areas for the coronavirus have been implemented by numerous businesses. Some organizations have even sought to prohibit employee personal travel to cluster areas.

In comparison, there have been fewer reports of companies in South Korea, Japan or Thailand implementing business continuity measures such as asking employees to work from home or limiting employee travel.

In Canada, some businesses have begun to execute pandemic preparedness measures such as training staff on what to do if they encounter someone who is ill, or if a customer-facing employee should fall ill at work. Local disaster management experts have expressed concern that some organizations, especially smaller firms, may lack the adequate resources or expertise to put measures in place that can effectively deal with employee health and operational risks posed by the novel coronavirus.

Internationally, businesses are struggling with disruptions to their supply chains in China{here}, where manufacturing and logistics activity has slowed to a crawl across the country. Technology companies are expected to be most affected; however, many other commodities, goods and services will also be significantly affected. Companies such as H&M, Japan Airlines, Baidu Inc, McDonald's and Tesla have all recently warned that the outbreak in China will have an impact on their businesses.

EMPLOYEE WELLBEING AND SUPPORT

BCP for the novel coronavirus is proving to be difficult, requiring businesses to consider operational and financial risks alongside health risks to one of their most valuable assets: talent. Safeguarding the wellbeing of employees plays an important role in keeping a company operational during this uncertain time. While practices implemented by companies have delved into infection control measures such as personal hygiene and social distancing, challenges in maintaining employee morale have not been discussed with the same fervor.

Some important issues to consider in BCPs include how to handle fear and xenophobia that have arisen due to concerns over the novel coronavirus. BCP designated personnel need to consider how to manage anxiety in the workplace, even over scenarios that would be benign during normal times, such as an employee who shows up to work with a minor cough.

Businesses that choose to implement work from home arrangements for large swathes of the workforce will need to consider how to help employees who are not accustomed to working remotely stay motivated during this time, alongside infrastructure concerns such as bandwidth and capacity issues for remote access of work servers, conferencing lines and other necessities.

Moreover, managers must consider how to balance their legal responsibility to treat all employees fairly against any measures the company may have to take to mitigate the risk of widespread infection at their firms. Consideration for the mental wellbeing of employees needs to be factored in alongside practices to safeguard their physical health against illness.

LONG ROAD AHEAD FOR BCP

Planning for an extended and uncertain period time in which businesses may have to run on contingency measures is another significant consideration for businesses. The novel coronavirus remains somewhat of a mystery. Health agencies are in the midst of containment efforts; however, it is uncertain how long these initiatives may take to bring regional outbreaks under control, or if these initiatives will be successful at all in preventing more widespread infection. As a result, businesses must examine how they will function under different scenarios and at varying percentages of operational capacity. Critical tasks will have to be identified and many organizations will have to make tough decisions weighing risk against productivity just in order to stay afloat.

*To read more by the Thomson Reuters Regulatory Intelligence team click here: bit.ly/TR-RegIntel

(By Helen Chan, Regulatory Intelligence)

This article was produced by Thomson Reuters Regulatory Intelligence - bit.ly/TR-RegIntel - and initially posted on Feb. 5. Regulatory Intelligence provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 400 regulators and exchanges. Follow Regulatory Intelligence compliance news on Twitter: @thomsonreuters

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