Market analyst Datamonitor predicts that spending on business continuity planning (BCP) and disaster recovery (DR) by financial services institutions will grow from an estimated $2.2bn in 2003 to $5.3bn by 2005, an increase of 45% over two years.
According to the report, 'Business Continuity in Financial Services', the threat of terrorism sparked investment in BCP but factors such as globalisation, straight-through processing (STP) and process automation are also drivers.
In addition, glitches such as disruption and monetary loss caused by power cuts or IT errors are also important due to the high likelihood with which they can occur.
Datamonitor says the focus on disaster recovery is shifting away from hardware-based backup and restore solutions to IT architectures that are resilient to data corruption or loss. Financial firms are linking investment to the increasing need to control operational risk, demonstrated by the Basel II initiative.
Markus Siivola, Datamonitor technology analyst and author of the report, says: "The legacy of terrorism is that it very publicly and clearly underlines the impact of uncontrollable events on the performance of business processes.
Corporates must recognise IT risk as a part of operational risk and act to identify, understand and reduce it," he adds.
According to the report, STP and process automation are the functions which have most impact on BCP and DR, particularly if the IT infrastructure shares data between systems and process transactions Interdependent systems operate on a batch basis where faults remain isolated and can halt all connected applications.
Ultimately, Datamonitors says that events such as maintenance, testing, system failure or a terrorist attack should be treated the same. If one part of a system goes down, the other parts should be automatically aware of this and invalidate any faulty transactions.