Thinking about Bird Flu

(Cross posted at Toomre Capital Markets)

Recently, I’ve been thinking a lot about the Bird Flu. The six most recent posts on Lars Toomre’s blog have been about the bird flu.

With this in the back of my mind, I went to a house party for the Humane Society of the United States. One of their fact sheets mentioned that poultry now makes up more 95% of the animals killed for food in the United States, with over 9 billion birds killed each year.

Everyone is talking about concerns about bird flu crossing species boundaries and today’s news reports of a cat that has died from the bird flu. They suspect the cat contracted the bird flu by eating an infected bird.

Yet what would an outbreak of the bird flu do to poultry production in the United States? What sort of impact would that have on American eating habits and overall food production?

At Toomre Capital Markets we talk a lot about risk management. How are poultry producers managing the risk of an avian flu outbreak in the United States? Are they buying special insurance? Are the insurance and re-insurance industries properly mitigating their risks of a devastating avian flu outbreak?

Of course that is looking at it from a financial markets perspective. When I discussed this with my wife, she asked about vaccinations against the bird flu. 9 billion bird vaccinations a year is a lot of vaccinations. What would the financial impact of that be on the poultry producers and on the vaccine producers? Is this even an option?

The BBC reports that the Bird flu vaccine is no 'silver bullet'. A government spokesperson said that, at present, vaccines were "not a path that they want to go down".
"Vaccination offers potential benefits but currently available vaccines are too limited to provide a general solution," he added.

The Bird Treatment and Learning Center in Anchorage, Alaska has a fascinating blog entry about the Yeoman Raven Master in England. There are six ravens in the Tower of London that legend has it “if the ravens left the Tower, the White Tower would fall and a great disaster befall the Kingdom”.

So, the Yeoman Raven Master is paying special attention to these ravens which have been locked up to protect them from the bird flu. "We are taking advice on the vaccinations against avian flu, and in the meantime, we will continue to give our six ravens as much care and attention as they need," the Yeoman Raven Master is quoted as saying. I wonder if those birds are insured, and if so, what their insurance policy is like.

It is stories like these that provide interesting chances to look at Risk Management from a much wider perspective.

(Categories: )