bcplan

Issue #44

Last Update March 2, 2006

Business and Finance Business Continuity Planning by David Katz How well are the companies that we rely upon for our economic life and daily comforts prepared to cope with a natural or man-made crisis? American businesses are under pressure from government, regulatory agencies, stock and commodity exchanges, insurance companies, and other companies they do business with to have an effective business continuity plan in place. Two conferences held this month, the Managed Funds Association's Business Continuity Seminar in New York, and the CPM conference in Las Vegas, highlighted different aspects of this growing effort.

The Managed Funds Association seminar was directed at an audience of hedge fund executives and their business continuity planners, as well as a sprinkling of consultants wanting to do business with them. The sessions and workshops focused on those areas particular to the hedge fund industry: the need to satisfy regulatory agencies and exchange requirements; the need for a faster recovery than most businesses require; the growing regulatory requirement to not only have a business continuity plan, but to post it on the company's website as part of its disclosure information for clients and potential clients; the need for the plan to include a description of how trading will resume after a crisis or how house and customer positions will be transferred to another firm for trading if resumption is delayed. Senior management's attention has been attained by the growing realization that the firm's fiduciary responsibilities require a sound business continuity plan, and by the SEC's requirement that management review the plan and sign off on it. The concerns mirror those of the banking and brokerage industry as a whole, and the level of effective planning in these areas of our economy is increasing.

The CPM conference, sponsored by Contingency Planning and Management magazine, was aimed more at the business continuity professional than at any specific industry. Attendees included business continuity planners from large and small companies, government agencies, hospitals and emergency management bodies like police and fire departments. Vendors of business continuity products and services were also in attendance, as well as companies or training and certification in business continuity planning and auditing.

Given the greater concentration of BC professions, the CPM conference was more heavily larded with tutorials and sessions aimed at the profession; from how to perform various planning tasks to how to get the backing of senior management (and an adequate budget) for building, maintaining, testing and exercising a BC plan and how to measure your organization's level of preparedness compared with others in your field or geographic area. Exhibitors offered specific solutions to BC problems: call centers to notify your employees during a crisis; remote-site computer installations; software to help in the preparation of BC plans; data recovery services; rentable space, with furniture, that can be used as temporary housing for a displaced office; university programs for undergraduate and graduate degrees in crisis management and information assurance; professional training and certification. One of the vendors offered a complete line of survival equipment, including portable toilets, smoke hoods and air masks, motion-charged flashlights, emergency medical kits and equipment; storable food and water, and communications equipment. Priced reasonably, the kits and items are available for home or business.

How prepared are we? Listening to speakers at these two conferences, our businesses are far better prepared than in the year 2000, better, even than after 9/11. Preparedness varies by industry, with the financial industry (banking, insurance and trading) probably the best prepared. Other areas that are becoming reasonably well prepared are infrastructure industries (electric power generation and transmission, transportation, hospitals and municipal health services, emergency response agencies (police, fire, EMT), water supply and others). Other industries (manufacturing, retail, service industries, etc.) lag behind considerably. In the event of a major emergency (hurricane, tornado, major fire, contamination of one sort or another, power outage, bombing) our lights soon will go on again, our phones will work, our ATM's will eventually give cash, ambulances and hospitals will do their jobs, municipal services (sanitation, traffic control, police and fire departments) will be available, and we will be able to trade stocks, bonds and commodities, at least in those major cities that have taken these activities seriously, as many have.

We may not have become better at averting disasters, but we definitely becoming more resilient to them.