Financial Services and Futures Industries Respond to the Call for Business Continuity and Disaster Recovery Planning;

Large firms well prepared to respond to a major threat; rate themselves as in “good shape” to recover and continue business, while small firms lag behind, according to a recent study conducted by the Tellefsen Consulting Group, Inc.

New York, NY (November, 6, 2003) – The largest financial services and futures industries firms are well-prepared to respond to a major threat or potential disaster, while smaller firms lag behind, according to the results of a new study conducted by the Tellefsen Consulting Group, Inc (TCG), a leading Wall Street management and technology consulting firm. The survey also revealed that the bulk of firms’ efforts emphasized disaster recovery readiness, not business continuity.

Half of large firms say they are "very well prepared" to respond to a major disaster or threat situation, while most small firms rate themselves as being "adequately" prepared. 15% of small firm rate themselves as "in fair shape" compared with 32% of large firms. While most firms rate themselves as being between "very well prepared" and "adequate", almost one third of them feel they are only "in fair shape" to respond to a major disaster or threat situation. "Larger firms may have had larger budgets to develop their plans, as they appear overall to be better able to respond to a disaster, commented Mr. Rapa. Generally speaking, smaller firms have not been the target and focus for much of the DR and BC planning approaches presently adopted by their larger counterparts."

Differences in planning among large and small firms were noted. 67% of small firms and 43% of large firms reported their timeframes for recovery and operation of mission-critical operations and technology functions as being 2 hours or less. Large firms distribute BC/DR plans more widely to their staff than smaller firms; 80% of large firms indicate distribution to all employees, compared with 40% of small firms. Unlike large firms, small firms have not supplemented Property and Casualty Insurance with supplemental Catastrophic Risk coverage - possibly for cost purposes - and have indicated no future plan to obtain any. "The implication is that smaller firms may have less complicated requirements than their larger counterparts, and their DR and BC plans should address and reflect the unique characteristics inherent to smaller firms, like flexibility, faster communications to a smaller staff, and smaller budgets ", observes Mr. Rapa.

A key finding of the survey revealed that 85% of the largest financial services and futures industry firms have adopted both Business Continuity and Disaster Recovery plans. Most firms have a dedicated person or group accountable for BC/DR planning and budgeting and firms conduct planning on a centralized basis. "Most have gotten the message and have relatively mature DR and emerging BC plans; the survey indicates that most firms developed and implemented their BC/DR plans within the last two years," noted John Rapa, President and CEO of TCG. The survey also revealed that 15% are without BC plans. "Most firms appear to be more ready for Disaster Recovery than Business Continuity, probably because firms have had DR plans longer and have been regularly prepared for system failovers," noted Mr. Rapa.

The TCG survey, which was conducted concurrent to the August 2003 Northeast blackout, provides a strong indication of the preparedness of a representative cross-section of financial services firms, across twelve major areas of disaster recovery/business continuity planning and related activities. Survey respondents included equity, options and futures exchanges, clearing corporations, futures commission merchants, investment banks, key service providers, regulators and securities broker-dealers; responses were evenly distributed among small (54%) and large (46%) firms. Small firms were defined as those with less than 250 employees and large firms as those with more than 250.

Turning to how firms cope with risk management, indications were mixed. On the one hand, 67% of all respondents’ BC/DR plans include the definitions and procedures for response to threats and disaster situations; on the other, firms provided a low self-assessment of preparedness to support recovery operations. 32% of large firms that assessed their strategy, readiness and procedures to support recovery activities reported that they were not prepared, while just 16% said they were well prepared. Additionally, only 25% of firms use or maintain a crisis management system. "Most firms’ BC/DR plans cover procedures for prevention and preparedness against threats, risks, disasters and how to react to them; on the other hand, indications are that many may not have the resources to ensure that they are well executed", commented Mr. Rapa.

The TCG survey includes comprehensive responses on BC/DR program management, prevention and preparedness, risk management, crisis management, recovery operations, data integrity and record retention, testing/preparedness and HR/staff and counter party contact information, hardware/ software/network inventories, physical facilities and locations, life safety and subsistence and PR and regulatory contacts. Copies of the survey and a 64-page findings report of the present state of financial services and futures industry readiness is available on the Tellefsen Consulting Group’s website.
Copies of the survey and final report may also be obtained by contacting the Tellefsen Consulting Group, Inc. 39 Broadway, Suite 750, New York, NY 10003, (212) 809-3800.

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