The Value of a Recovery Plan - Lessons From Katrina

By keves January 4, 2008 @ 10:26 pm

As the Hello World! post for this blog, we want to start by sharing lessons learned by investment advisers effected by Katrina. The Securities & Exchange Commission provided summary findings in their June 2007 Compliance Alert. Here’s the relevant excerpt:

Particular provisions of the advisers’ Disaster Recovery Plans that appeared to be effective with respect to the adviser’s ability to provide uninterrupted advisory services to clients in a compliant manner after a disaster included:

• a pre-arranged remote location for short-term and possible long-term use
• alternate communication protocols to contact staff and clients, such as cell phones, text messaging, web-based email accounts, or an Internet website
• remote access to business records and client data through appropriately secured means that ensure ongoing compliance with Regulation S-P and other confidentiality requirements
• temporary lodging for key staff where necessary as a result of a relocation of the firm
• maintaining accurate and up-to-date contact information for all third-party service providers, including custodians, broker-dealers, transfer agents, pricing services, and research firms
• familiarity with the business continuity plans of such third-party service providers
• contingency arrangements for loss of key personnel, such as the president or primary portfolio manager, either temporarily or permanently
• effective training of staff on how to fulfill essential duties in the event of a disaster, including compliance matters
• periodic testing, evaluation, and revision of disaster preparedness plan
• maintaining sufficient insurance and financial liquidity to prevent any interruption to the performance of compliant advisory services