Firms Look at All Aspects of Security after Attacks in US
In the long and dynamic history of risks faced - and faced down - by financial institutions, the events of September 11 both delivered a shock and measured organisations' ability to bounce back.
The experience of one firm in particular, bond-trading house Cantor Fitzgerald, underscores the swiftness with which financial institutions can rebound after unprecedented human tragedy and operational upheaval. Despite losing more than 700 employees and the facilities of its main New York trading floor in the terrorist attacks on the World Trade Center, Cantor Fitzgerald was up and running when US bond markets reopened just two days later.
Lee Amaitis, Cantor Fitzgerald's London-based chief executive, says: "We used to be a triangulated company, but now we are working from two centres."
He says the firm's structure once featured dealing hubs in Manhattan and the UK and an operations and data centre in Rochelle Park, NY, adding: "That we were able to come back so quickly is down to the spectacular effort by our people and a credit to the customers that stood by us, as well as to the fact that we were set up perfectly for a disaster like this even though it was something we could never have expected."
Indeed, it is hard to imagine even the most prescient risk managers conceiving of contingencies for the devastation visited upon Cantor and a host of other firms, and on so massive a scale.
Yet, the fact that the firm's data centre lay far from its trading operations, and that the technology underpinning Cantor's operations proved robust, enabled surviving employees to resurrect customer links within 48 hours and preserve the business.
Less surprising is that amid the fall-out from the terrorist attacks, more firms are taking a deeper look at their exposure, especially to non-traditional forms of operational risk. They also are examining current levels of preparation and safeguards in light of these newly expanded risk boundaries.
Mike Finlay, sales and marketing director at London-based Raft International, a risk-management software supplier, says: "Since September 11, every single organisation around the world - and not only those in financial services - are revisiting the contingency plans that they have in place.
"As they examine their disaster recovery plans, people are beginning to realise that they can't look at any of this stuff in isolation. It all links together."
Of course, banks have long scrutinised issues of credit, counterparties and the constraints faced by their far-flung operations when attempting to quantify and control the risks inherent in conducting business in increasingly borderless global markets. Problems with their employees and their own physical plants have also come under the microscope in light of spectacular blunders and breakdowns at institutions like Barings and Credit Lyonnais.
Regulators, too, remain concerned that banks are doing their utmost to protect both the retail and institutional consumers of their services from undue exposure to risk, as well as limiting the potential for meltdown of the global financial system.
Yet the complete obliteration of both infrastructure and human capital in the World Trade Center attacks has led an increasing number to question whether their plans and organisational structures meet the demands of a hostile world. …