When the first reports appeared of a new flu in Mexico, Sandra Carson, vice president of risk management at Houston-based Sysco Corp., a $37.5-billion food service provider, activated the company's pandemic response plan.

"We had developed a plan during the avian flu scare," Carson says, "and have updated and practiced it every year." That plan calls for stockpiling masks and disinfectant, and educating employees about how to treat and avoid spreading the disease. It also involves altering the company's product mix. "We knew that if this flu hit, many of our customers, like schools and hospitals, would have fewer workers available to prepare meals, so we shifted to easier-to-prepare meals," she says. Sysco notified suppliers about its changing supply needs and warned them that deliverers needed to meet its tightened sanitation guidelines. The plan also involves curtailing executive travel plans and "nonessential group meetings."

The last thing American companies confronting a severe economic crisis needed is the threat of a pandemic–a surprise outbreak of a strange new strain of flu just across the border. How companies respond to the threat offers both lessons and warnings about the importance of thinking systemically about risk.