Fail to prepare and prepare to fail

Adequate business continuity and disaster recovery planning is of paramount importance within the financial sector, as Chris Alvord, CEO and founder of COOP Systems, explains to FST.

FST. Keeping systems up and running in financial systems following some kind of interruption is critical. Do you think the industry is generally in a good space when it comes to Business Continuity planning?
CA. Systems are only a part of the equation. In that sense, Financial IT recovery is in good shape. A potentially bigger problem is with non-IT recovery processes and assets, especially as the possibility of a large-scale disaster is considered.

FST. In your opinion what are the critical pain points that need to be addressed in this area?
CA. Besides IT assets, there are many other interdependent processes, people and resources involved in an organisation’s recovery. They all change constantly. Co-ordinated planning and the related informational update support need to be managed aggressively to be ready for a disaster.

FST. Using virtual computing has the potential to protect against the risk of business operations being disrupted? What are the pros and cons of this approach?
CA. In these early stages, great potential seems possible in virtual computing, allowing for fluid management, assignment and reassignment of computer assets over a network. My concern would be the level of difficulty of this new approach, when more traditional, tested methods work just as well for BCM purposes. For example, having failover to a synchronised second location, available securely on the Internet, accomplishes the same goals and is more proven.

FST. In many cases the value of a proper business continuity plan is hard to quantify – as how do you calculate the value of an event that doesn’t happen because of good planning? How can operational risk planners deal with this to ensure bad events don’t impact?
CA. Organisations grapple with lots of types of risk. Enterprise risk departments try to manage strategic, operational, financial, legal and regulatory risks. In all these areas, the need is to make investments to mitigate risks to the extent justified by business benefits. Analysing the possibilities of disruptive events and related financial impacts like share prices drops and market share losses is part of the risk/reward calculation. For example, business insurance investments are made based on the odds.

FST. What do you think the main ‘black swan’ risks are to financial institutions might be in the next ten to twenty years? Are these worth preparing for, or should the focus be on known risks?
CA. Planning has its own rewards. Dwight Eisenhower was famously quoted as saying, ‘In preparing for battle I have always found that plans are useless, but planning is indispensable’. Large-impact, hard-to-predict, and rare events like major urban earthquakes (Japan), Canary Island tsunami (East Coast US), pandemic, and cyber attack may well be on the horizon. Whatever the eventual strategy, all scenarios will never be known. Planning for whatever reason has great value in recovery operations.

FST. What solutions does your company offer financial institutions in this space?
CA. COOP System offers myCOOP™, a web-enabled enterprise BCM software package allowing real-time collaborative creation and use of recovery planning information anywhere, any time. Access is by browser and PDA. With no deployment risk, lower cost of ownership, extreme ease-of-use and full internationalization, COOP Systems and our global partners are setting the standard for advanced BCM software. www.coop-systems.com

About Chris Alvord
He is CEO and Founder of COOP Systems, a worldwide BCM software supplier. He has CBCP certification from DRII and has taught hundreds of students as an Adjunct Professor and NYU, USDA Graduate School and for DRII. His education includes a BA with Honours from Harvard College, MBA from Harvard Business School and doctoral course work at Virginia Tech.