The Financial Services Sector Coordinating Council has issued a paper identifying critical issues for industry participants to address in preparing the US financial system for potential disruption caused by acts of terrorism, natural disasters or cyber attacks.
In essence, the 2005 'action agenda' calls for firms to implement the rigorous standards for business continuity and disaster recovery laid down by the regulators' Interagency Sound Practices paper in 2003 and to create a more structured and co-ordinated approach to testing efforts.
While the Interagency paper focuses primarily on the recovery of critical clearing and settlement processes among certain firms, FSSCC members agreed that the knowledge developed by these firms as they comply with the paper could benefit a broader industry audience.
Donald Donahue, sector coordinator and chairman of the FSSCC, says: "Affected firms are expected to complete their preparations to comply with the Interagency paper by the end of 2006. We believe there is significant value in having these affected firms coordinate and share their ‘suggested practices’ and lessons learned with a wider audience of financial services sector firms."
Industry efforts to test business continuity preparations passed another milestone earlier this week as part of the Department of Homeland Security’s TOPOFF3 Exercise. The Securities Industry Association and The Bond Market Association coordinated the industry’s participation, which also involved The Futures Industry Association and professionals affiliated with broker-dealers, exchanges, utilities and regulatory agencies.
The third in a series of Congressionally mandated counterterrorism exercises; TOPOFF3 is the first to include significant involvement from the private sector. It involved terrorist attack scenarios staged in Connecticut and New Jersey.
As part of the exercise, the financial services industry tested its emergency call sequence and assessed the potential impact of the TOPOFF3 test scenario on market operations.
SIA executive vice president Donald Kittell says the contingency procedures were successful in ensuring that the key players were kept up-to-date on events: "The participants received the necessary information and were able to communicate among themselves. This resulted in a swift, controlled response to the simulated attack."
SIA, TBMA and other market associations are currently developing industrywide order-flow tests to validate the industry’s ability to operate through major disruptions.
To read the full FSSCC action paper:Download the document now 530 kb (Adobe Acrobat Document)