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Avian Flu: Are Banks’ IT systems ready?

U.S. Treasury to test financial services response and business continuity plans to avian flu pandemic.

The U.S. financial services industry will test its ability to respond to an avian flu pandemic with an exercise to begin in late September that will be sponsored by the U.S. Treasury Department. "A lack of preparedness could turn a biological problem into one that seriously affects the availability of financial services to Americans and the global economy," said D. Scott Parsons, Treasury deputy assistant secretary for critical infrastructure protection and compliance policy, in a release.

"[The] Treasury is encouraging financial institutions of all sizes from across the country -- including banks, credit unions, securities firms and insurance companies -- to participate," Parsons continued. President Bush directed the Treasury in May 2006 to coordinate with the banking and finance sector to better prepare its response to a pandemic crisis.

According to Gartner (Stamford, Conn.), banks can leverage IT to ensure their business operations continue if travel and transportation restrictions, quarantines, or problems with vendors or employees occur. "Organizations must include the possibility of an avian flu pandemic in their business continuity planning and crisis management preparations," said Steve Bittenger, research director at Gartner, in the release.

The voluntary exercise will bring together the public and private sectors through the Financial and Banking Information Infrastructure Committee and the Financial Services Sector Coordinating Council. The FBIIC-FSSCC Pandemic Flu Exercise of 2007, beginning September 24 and running for three weeks, will focus on the continuity of financial services for Americans in the event of a pandemic crisis. The exercise will examine a number of issues, including human resources, continuity of operations and dependencies on other sectors, such as transportation, energy and telecommunications.

The test will occur entirely online using a secure website hosted by the Securities Industry and Financial Markets Association (SIFMA). SIFMA is expecting hundreds of financial institutions to participate, says Howard Sprow, the group's VP of business continuity. The American Bankers Association is taking the lead on recruiting banking organizations.

Fallout of High Absenteeism

According to Sprow, SIFMA and the federal regulators have three main goals for the exercise: The groups want to identify the potential effects on the market as a whole that high absenteeism will cause; provide participants with realistic and challenging scenarios to check their own strategies and procedures; and identify ripple effects that high absenteeism will cause within and across multiple markets, he relates.

Each Monday, financial institutions will receive scenarios to play out. The exercise asks the participants to work through each scenario to judge possible effects. They then have until Wednesday of that week to answer a set of key questions about their response.

A similar exercise conducted in the United Kingdom late last year indicated that there could be bottlenecks caused in the distribution of cash as well as widespread branch closures caused by absenteeism rates, which could reach as high as 60 percent. Gartner recommends that organizations establish or expand policies and tools that enable employees to work from home with broadband access, appropriate security and network access to applications. Banks also should expand online transaction capabilities and self-service options for customers and partners, according to Gartner.

Results of the Treasury's study will be available by the end of the year, SIFMA's Sprow says.


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