IBM is offering a new service to help clients model the potential economic and social impact of a simulated pandemic – from AIDS to Bird Flu – on organisations and to help businesses prepare for and react to potential crises.
The World Bank has estimated that a flu pandemic could cost 2% of one year's global GDP, or $800 billion. The US Congressional Budget Office also estimates that a pandemic could cost 1,5% of US annual GDP under a moderate scenario, and 5% under a severe scenario. However, these estimates may downplay "network effects" – the business impact of disruptions to supply chains, distribution networks, communications infrastructure and potentially the financial system.
By modeling potential links between the dynamics of disease and business, the Pandemic Business Impact Modeler (PBIM) Service, developed by IBM Research and implemented by IBM Global Business Services consultants, is designed to help users simulate the potential impacts of a pandemic outbreak on business performance. It also is designed to aid in pandemic preparedness by allowing companies to run various simulations which in turn may help them to develop and test current and future crisis management plans.
For example, a manufacturer may have a global supply chain consisting of suppliers that provide raw materials to a number of fulfillment sites, which in turn assemble and ship finished goods to customers worldwide. Or a financial services company may have a global branch and delivery network supported by data processing and service centers around the world.
By using the PBIM service to simulate where a pandemic starts and how rapidly it might spread, the modeler can help these companies gain a better understanding of the potential financial impact — should a pandemic interfere with part of their supply chain. They could also model projections in advance on how various crisis management strategies might play out.
"Pandemics may be one of the most challenging types of business disruptions due to their potential global reach and the possibility of long durations," says Shanker Ramamurthy, global leader for IBM's banking and financial markets consulting practice." With the globalisation of business today, companies are becoming more dependent on resources and markets around the world, which means the potential impact of a pandemic to business performance has become increasingly relevant and complex.
"The PBIM service is a strategic planning tool that can be used to experiment with pandemic scenarios – helping organisations to assess different response strategies in advance."
The PBIM service links epidemiological phenomena to business impact through the following integrated simulation modules:
Epidemiological – can employ several different epidemiological "engines," and uses sophisticated mathematical modeling techniques which are designed to simulate the potential spread and severity of a disease over space and time – based on inputs to the module. The engines can be used interchangeably as part of this module.
Infrastructure – is designed to help evaluate the potential impact of a pandemic on the infrastructure that is essential for the daily operation of most businesses. Infrastructure examples include electricity, air and ground transportation, water and the Internet. This module uses a systems dynamic model designed to represent a network of possible numerical cause and effect relationships between the spread of the disease and the availability of infrastructure in each geographical location.
Economic – helps to evaluate the impact of a pandemic on the gross economic output across multiple industry sectors. It uses a systems dynamic model to represent a network of potential numerical cause and effect relationships between the spread of the disease and the economic health of each country. By combining input from the epidemiological and infrastructure modules it can project potential percentage changes in consumption of goods/services across industry sectors in the event of a pandemic.
Behavioural – designed to simulate potential organizational, social and psychological reactions to the spreading disease. It is designed to capture potential cause and effect relationships between the progression of the pandemic and the workforce availability. The behavior module receives input from both the epidemiological and infrastructure modules as well as information regarding any mitigation policies that are implemented within the company such as vaccinations or distribution of face masks. It also generates a projected time series of the percentage of employees who are available to work from home and from the office, for each company site.
Supply chain – focuses on the impact of the pandemic on supply and demand. Based on information from the other modules and the locations of customers, the supply chain module can estimate the impact of a pandemic on the demand for products and services, as well as on the availability of the supply of resources. It can also be used to help determine the ability of the company to deliver products and services and to help identify vulnerabilities in the supply chain.
Financial – helps to calculate potential revenue earned and mitigation costs incurred over the planning horizon. The output from this module helps in the examination of trade-offs between mitigation investments and the potential impact on revenue. Even in the absence of mitigation actions, users can use this output to project the amount of revenue that may be at risk under various pandemic scenarios.