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Worst-ever Ebola outbreak disrupts global supply chains

Worst-ever Ebola outbreak disrupts global supply chains

Aside from the record death toll from the Ebola outbreak in Africa, businesses around the globe will be affected by the pandemic, with the mining, agricultural and energy sectors most at risk of having their businesses disrupted.

What’s more, even companies that don’t have operations in the affected areas might have suppliers there who have to shut down, making disruption of transportation and supply networks a potential problem for many other organizations.

The outbreak that began in Guinea and spread to Liberia, Sierra Leone and Nigeria had claimed more than 1,100 lives by the end of last week, prompting quarantines, flight cancellations and business disruptions.

“From a corporate risk management perspective, the issue is usually how to reduce illness and avoid business disruption,” said Daniel Ryan, London-based head of population risk and data analytics research and development at Swiss Re Ltd.

John Rose, Annapolis, Maryland-based chief operating officer of risk management information and consulting firm iJET International Inc., said travel and logistical networks are particularly sensitive to disruption by a pandemic.

“In area impacted by Ebola, you are seeing a serious reduction in air traffic,” Mr. Rose said. “No airline is going to fly a wide body jet to Africa if only nine passengers are aboard, so you have to have a plan B to move your assets around.”

Quarantines and border closings also affect employees and supply chains, said Kimberly Hale, a senior consultant in the reputational risk and crisis management practice at Marsh Risk Consulting in Chicago.

“Companies need to keep in mind that if they are sending people to affected regions, borders can close at the drop of a hat,” Ms. Hale said.

Mining, agricultural and energy companies tend to have large operations in the African nations, so they now are bearing the brunt of the Ebola pandemic.

For example, Luxembourg-based steelmaker and mining firm ArcelorMittal S.A. last week said contractors working on expanding an iron ore mining site in Liberia had declared force majeure and were moving workers out of the country, shutting the project down.

In a statement, ArcelorMittal said it had taken steps to protect employees and operations, including providing thermoflash scanners to test employees and visitors for fevers at all its Liberia locations, personal protective equipment to hospitals and clinics, and training to health care workers and employees.

Jason Jarrett, Vancouver, British Columbia-based chief adviser for global business resilience, global security with Rio Tinto Group, said the London-based mining company, which has extensive operations in Guinea, put in place appropriate steps to minimize the risks when the Ebola outbreak was first detected in March.

The company enhanced medical support for its people, Mr. Jarrett said, noting that all Rio Tinto staff in Guinea receive regular briefings with the latest medical advice and those visiting are fully briefed on arrival. Rio Tinto is also providing sanitation supplies such as soap and chlorine to the communities in which its people live and work.

“To support the work of the Government of Guinea and Doctors Without Borders in fighting the disease, we are distributing prevention kits, organizing public awareness campaigns and providing sanitation equipment such as shovels, rakes and refuse bins,” he said. “We have also constructed some latrines in one of the main towns to help improve hygiene.”

Nonetheless, Mr. Jarrett said that while Rio Tinto has not stopped the movement of its people in, out or around Guinea, it is ensuring that travel is only for essential purposes.

Chris Baudouin, Chicago-based CEO of the Aon Global Client Network, said an aggressive employee safety approach is warranted.

“A lot of our clients are mining operations, which tend to have assets in remote areas and limited access to health care and transportation,” Mr. Baudouin said. “So they tend to err on the side on caution, especially if airlines are shutting down flights.”

To remain abreast of the situation, Susan Morton, senior consultant in the reputational risk and crisis management practice at Marsh Risk Consulting in Boston, said it’s important for businesses to have pandemic, crisis response and business continuity plans in place, and closely follow guidance from organizations such as the World Health Organization and U.S. Centers for Disease Control and Prevention.

There also are also dedicated, real-time third-party risk monitoring services available.

Michael Kiewski, Chicago-based director of Aon’s Crisis Operations Center, said his staff provides risk managers with real-time information from the company’s crisis centers in Chicago and South Africa.

“We are taking open information from media and social media, analyzing it and sending it out to our risk manager clients,” Mr. Kiewski said. “We are watching which airlines cancel flights and which countries are shutting down borders.”

Companies with workers within the affected areas also face pressure from workers’ families and adverse media attention that can tarnish their corporate reputation.

“Stranding employees exposes you to lawsuits,” Mr. Rose said. “That’s a real risk.”

Companies that do extract employees from affected areas of Africa still need to bear in mend Ebola’s lengthy incubation period and plan accordingly. “You can leave Sierra Leone or Guinea and be perfectly fine and three weeks later come down with it,” Ms. Hale said.

Indeed, to reduce the risk of transmission, Mr. Jarrett said Rio Tinto has asked workers who have visited the highest-risk areas to stay at home up to 21 days before returning to work.

Geoff Taylor, London-based executive director at Willis Group Holdings P.L.C. said the pandemic highlights the need for companies to focus on supply chain resiliency.

“You might be able to withstand the loss of one factory, but what if you lose a key port or have an entire country subject quarantines or sanctions?” he said. “So if you have single-source suppliers or several concentrated in a certain region, it is good to contemplate what your options are.”