Pandemic Test Results: Few Firms Confident in Disaster Plans

Only 12 percent of Participants Describe Plans as ‘Very Effective’ Preliminary results of the nationwide pandemic exercise for the financial services industry were released recently, and show that while the industry itself is among the most prepared, there is still much work to be done for individual institutions to be fully prepared for a true pandemic disaster.

More than 2700 firms with over 10,000 participants took part in the exercise that ran over three weeks in September and October. While banks made up the majority of participants, insurance companies, securities firms and exchanges and state and federal regulators also took part in the exercise. The Treasury Department, the Financial Services Sector Coordinating Council for Critical Infrastructure Protection (FSSCC) and Homeland Security, and the Securities Industry and Financial Management Association (SIFMA) operated the exercise.

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The scenario was set showing that when the pandemic hits the U.S. it would kill approximately 1.6 million people, another 9 million would be hospitalized, and basics such as food and antiviral medications would run low.

Preliminary data released shows that when asked, "Based on the lessons learned from the exercise, how effective are your organization's business continuity plans for a pandemic?" participants responded:

  • Moderately â" 56%
  • Minimally â" 28%
  • Very effective â" 12%

The exercise included as many possible events that would occur during a pandemic: telecommunication, Internet and power outages; a business slowdown because of absenteeism rates due to illness; school closings; food and medical shortages; reduction of regular municipal and county services; and transportation cuts and closures both nationally and globally.

The exercise simulated a pandemic wave with a peak absenteeism rate of 49 percent. The exercise examined a number of issues including human resources, continuity of operations, and dependencies on other sectors such as transportation, energy and telecommunications.

The results released offer a basic first look at the potential impact of a pandemic flu outbreak. More detailed results on the pandemic's impact and the industry's response will be released in the coming months, as data is analyzed. More than 300,000 pieces of data were collected during the exercise.

Effective Exercise
"The strong public-private coordination on this exercise allowed us to reach more institutions than we ever expected," says Valerie Abend, Treasury's Deputy Assistant Secretary for Critical Infrastructure Protection. "And by allowing almost all participants to find critical gaps in their planning, this exercise was an unquestionable success in helping the industry prepare for such a crisis."

The pandemic exercise participants were â-a good representationâ" of the financial services industry, with more than 70 percent of the firms having $100 million in assets or less, says Howard Sprow, Vice President of business continuity planning at SIFMA. Geographic location of the participants was also spread evenly across all regions.

"We wanted to look at the impact a pandemic can have on our sector," says George Hender, FSSCCâs chairman. "One thing we tried to do is put some real stress on the firms."

Not only did the exercise give the industry a better picture of preparedness, Hender says, â-But we also wanted to give firms a chance to exercise their pandemic plans.â" This is an important point for many institutions. â-Because when you listen to the medical experts, they say â"itâs not a question of if, it is a question of when, that a pandemic will occurâ,â" Hender says.

Planning for business continuity during a pandemic is much different than normal business outages caused by natural disasters. A pandemic wonât last for one or two days, but will run over a period of weeks, even months.

This success and wide ranging participation of this exercise has already piqued interest of other government agencies and inquiries from other governments across the globe. The only other large pandemic exercise for financial services was held in the UK in 2006. Abend said the exerciseâs complete scenarios have been made available on the website for those institutions that might not have participated so they could also compare their state of pandemic preparedness.(http://www.fspanfluexercise.com/)


About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.




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