To be continued

Maurizio Capuzzo examines the critical need for financial services organisations to invest in business continuing planning.

FST. Why is an effective approach to business continuity essential for financial services industry? Do you think enough is being done in this area?
Maurizio Capuzzo. Business continuity planning has evolved in recent years, and has become institutionalized in the financial services (FS) industry as a global function that must be planned and managed at the corporate level, and executed at the country/regional level. BCP has shifted from a pure IT driven process that includes communications technology, people, organizations, business procedures and infrastructure to a business function.

The growing intricacy and refinement of technology in the FS industry makes managing the disruption a very pinpointed challenge. Firms must keep vigilant in protecting associates, property and maintaining services to their clients in unexpected business situations, whether a natural disaster, terrorist threat or technology interruption. Traders need to make fast decisions, cover their positions and let customers know what’s happening no matter what.

FST. What main challenges currently face the successful implementation of BCP measures? Are there significant differences for large and smaller organisations?
MC. It’s a notable fact that of all the capabilities available at a modern trading desk, the trading turret and trader voice services are the two most critical to include in a practical business continuity plan. Unfortunately, it is also probably the most challenging.

Providing redundancy for computers, email, market data and electronic trading platforms is relatively straightforward, however, the trading environment requires dedicated access to client private lines which provides a much more challenging task.

The reality is that a practical BCP for voice trading communications has to consider the traders and his/her partners. Seamless communications means that traders can trade from designated BCP sites, without forcing clients to change the way they conduct business with the firm.

With regard to the differences between small and large organizations, BCP preparedness is critical to broker/dealers, top tier management firms and the major banks, industry utilities and organisations. Tier II firms are focusing more and more in BCP preparedness than in the past, particularly when it comes to the customer engagement. We see a different approach between tier I and tier II firms, particularly when it comes to ‘outsourcing’ to external vendors.

FST. Do you think there is a lack of understanding as to what BCP actually is? How would you define it and what needs to be done to help the industry understand it?
MC. Business continuity and disaster recovery processes are the holistic process performed by FS organisations to ensure mission critical business functions are available to clients, suppliers, regulators and other entities any place, any time. IPC has been fostering this concept for many years and many of our customers have reached a very innovative approach to the problem assuring a certain level of redundancy and ‘natural resiliency’ across data and voice access by guaranteeing no single point of failure.

There is more understanding and maturity to this concept than in the past and this reflected by the fact that BCP has often a defined space in IT budgeting. There has also been a progressive maturity in the awareness and importance of BCP.

FST. Aside from quick recovery from adverse events, does a good BCP approach have the power to offer value and competitive advantage to an organization?
MC. In the last decade the development of internet telephony, specifically VoIP has had a dramatic effect on traditional telecom services. Capitalizing on robust and hardened data networks utilizing IP technology has allowed non-traditional network service companies to offer voice services at reduced costs for consumers.

What many IT professionals might not be aware of is that the initial investment many trading firms made in IP-based systems can continue to pay dividends. Beyond the gains offered in flexibility, the continued adoption of SIP in modern IP-based systems and network services are creating opportunities to support new business continuity solutions that were not possible or economically feasible a decade ago.

With the continued evolution of communication technology and networks connecting financial service firms together there is an emergence of new trading floor designs that can improve business resiliency without putting a strain on IT resources and CAPEX budgets.

Conversely, developing an active-active BCP that leverages existing regional offices is a far more practical approach. What was impractical a decade ago is now technically feasible and often economically advantageous for small, large and global trading organisations that have already invested in IP-based trading communications.

Maurizio Capuzzo is vice president at IPC and is responsible for managing the company’s unparalleled range of product marketing, solutions and marketing communication programs for trading floor in the financial services industry.