Business Continuity Planning again a top priority for Wall Street Firms

Boardroom interest in BCM increases on Wall St as new regulation pressure builds

Business continuity planning (BCP) once again is the 800-pound gorilla in Wall Street boardrooms. And as vendors deploy a swathe of new products to ensure that companies can function and continue to close deals in the midst of any crisis, the financial industry is witnessing a growing trend toward the virtualization of trading platforms and other services.

Planning for catastrophes has been at the forefront of companies' priorities since 9/11, "but by 2003, companies realized just how expensive implementation of a BCP strategy could be, and started trying to cut costs," says Alex Tabb, a partner at Boston-based TABB Group who covers crisis and continuity services. "It's a cyclical trend. Firms spend more, then cut back."

With the U.S. market currently in buoyant shape, companies once again are investing in their business continuity planning, adds Tabb. In addition, companies are now required to comply with NASD Rule 3510 and NYSE Rule 446, which state that members must create business continuity plans that include contingencies for providing customers with access to their funds and securities during a disaster, data backup and recovery, an alternate physical location for employees, and communication among the firm and its employees. But Tabb asserts that the upswing in interest in business continuity isn't tied to a specific event or regulation. "The trend isn't tied to terrorism or hurricane hysteria," he says. "It's more subtle." "Our clients are moving toward virtualization," Tabb adds.

In the past, firms were limited in their business continuity plans by technology, largely due to bandwidth limitations, he explains. But new technology and faster broadband connectivity are now enabling employees "to work and be productive wherever they are," Tabb says. For instance, BT's new Virtual ITS platform, which is aimed at companies with 25 or fewer trading positions, enables traders to work from remote locations in a crisis.

According to the company, that includes working from home, since the technology supports a range of BT user devices and applications, including ITS Netrix; ITS Anywhere for IP phones, Web and wireless devices; and ITS Myriad. "There's a lot of interest right now in business continuity, and a real focus on E-mail, as it's so critical to systems of the company," says Warren Roy, president of Vancouver-based Global Relay. "Many companies have failover servers. Ours operate in real time. If your systems fail, you can use ours instantly." But companies increasingly are realizing that they can harness virtual technology to increase their employees' efficiency not just during a disaster, but on a regular weekday or a Saturday night, too. "One of our clients didn't want to give folks BlackBerrys [for business continuity planning] as they thought they were a toy," says TABB Group's Alex Tabb. "But it means so much more efficiency. People can respond all the time. It helps. A virtual platform isn't just for a pandemic. It's also to be used at home in the evening or on a Saturday. It's about day-to-day methodology. So you don't have to learn a whole new system. It's really tough on people to learn a new system -- it interrupts their work flow." "People really need to be able to work irrespective of where they are," agrees Christopher Corridon, VP of marketing for Wesley Clover Solutions.

Wall Street firms' business continuity plans will soon be put to the test. In September, the U.S. Treasury, together with SIFMA and the Financial and Banking Information Infrastructure Committee (FBIIC), is planning a pandemic drill for the financial services industry. The multiweek test should give firms enough time to simulate a full pandemic and clarify its ripple effects within the markets and interdependent sectors.

In the meantime, Tabb points out that the sweet spot in the field of business continuity is when a vendor can create a product that increases overall efficiency for a company while adding levels of resilience. "Firms don't like to spend a lot on business continuity," he says. "Because of the cost, we find that the most effective planners are those who look at business from a perspective of what's good both for the business and for continuity." Jeanette York, senior manager in the Financial Services Practice at consulting firm Oliver Wyman, agrees. "Business continuity planning isn't just about IT," she says. "There are a lot of companies looking at broader risks. Typically, they solve it by adding more hardware. But it has to fit in the entire company."

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