Wall Street not prepared for bird flu outbreak, says federal watchdog

Wall Street not prepared for bird flu outbreak, says federal watchdog

The US government's watchdog agency says some key financial markets participants are still not fully prepared for dealing with a widespread outbreak of avian flu and has called on regulators to set deadlines by which firms should have contingency plans in place.

In its report on the security and resiliency of US financial markets, the Government Accountability Office (GAO) says of the seven organisations it studied - which included exchanges, markets, clearing houses and payment processors - only one had a fully developed plan for dealing with a bird flu pandemic.

The GAO says although organisations have improved physical and information security measures, most firms are not fully prepared for dealing with a severe outbreak of bird flu and may fail to consider the potential scenarios associated with a pandemic.

As a result the GAO has called on federal regulators to give financial markets a planning deadline.

"Having regulators give greater consideration to providing specific instructions to market participants and setting a date for having pandemic continuity plans complete would increase the likelihood that organisations fully prepare and have adequate time to test and adjust any planned responses in advance of the outbreak of an actual pandemic," says the report.

GAO says The Office of the Comptroller of the Currency, the Federal Reserve and the Securities and Exchange Commission jointly responded to its findings. In a letter the regulators say they will ensure any weaknesses in the ongoing pandemic-planning process are appropriately addressed, and if organizations' efforts are found lagging they will consider taking additional actions, including those suggested in the report.

Over a year ago US regulators called financial institutions across the country to devise contingency plans for dealing with a possible widespread outbreak of avian flu. The Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Office of Thrift Supervision issued a joint advisory notice in March 2006 calling on banks to consider the impact of a possible bird flu pandemic on business.

Earlier this year banks in the UK were forced to re-evaluate bird flu contingency plans after a planning exercise organised by British regulators found that increased staff absences could lead to branch closures and empty ATMs.

Read the GAO report here:» Download the document now 566.1 kb (Adobe Acrobat Document)

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