Pandemic flu test: Planning for the next disaster

Financial services will be the first industry to plan for a pandemic. Time for broader planning? On Sept. 11, 2001, the business continuity and the financial services industries met head-on. Long-term disruption was avoided in part by a decision to let workers return to work on Wall Street six days later -- a choice that has since been questioned based on a revised analysis of air quality. Given the vital role p

Financial services will be the first industry to plan for a pandemic. Time for broader planning?

On Sept. 11, 2001, the business continuity and the financial services industries met head-on. Long-term disruption was avoided in part by a decision to let workers return to work on Wall Street six days later -- a choice that has since been questioned based on a revised analysis of air quality.

Given the vital role played by the financial sector, many feel that creating detailed response plans to counter worst-case scenarios is long overdue. That's why the U.S. Department of the Treasury and the Securities Industry and Financial Markets Association, in conjunction with the Financial Banking Information Infrastructure Committee (FBIIC) and the Financial Services Sector Coordinating Council (FSSCC), will be conducting a three-week "Pandemic Flu Exercise" this year from Sept. 24 through Oct. 12.

The exercise assumes an outbreak of H5N1, a much-feared strain of the avian flu virus. Were H5N1 the source of a major pandemic, it could cause massive and protracted absenteeism. According to a bulletin issued by FBIIC and FSSCC, "all normal conditions and operating relationships potentially will be disrupted."

The primary purpose of the virtual exercise, which will take place over the Internet, will be to identify "systemic risks" to the financial services sector. It will provide an opportunity for companies to evaluate their current business continuity plans in relation to this particular type of disaster, and to understand the ripple effects within the financial markets and in other highly interdependent sectors.

Participating with the voluntary exercise will be an advisory group with representatives from the power and telecommunications industry as well as the Center for Disease Control (CDC).

At present, government regulations leave the details of preparedness to the enterprise. NASD Rule 3510 and NYSE Rule 446 simply state that financial services companies (including banks, securities firms, insurance companies, and credit unions) must have in place business continuity plans that include "contingencies for providing customers with access to their funds and securities during a disaster."

Of course, a large-scale pandemic would touch almost every industry. According to Dave Engaldo, a spokesman for FSSCC, the more automated IT is, the better off your company is. "You are going to be less dependent on people who are absent or at home, worried about coming into office or taking care of family," Engaldo says. But automated trading systems or clearinghouse systems still need to be piloted to some degree.

That's why I believe pandemic-proof communications is the key. To explore that aspect, I called to Steve Zirkel, general manager of business continuity at Varolii, a company that offers on-demand interactive communications services.