Business Continuity - US Treasury questions Wall Street's progress

Hank Paulson, the newly appointed US Treasury Secretary, has said that he will launch a further review of Wall Street’s ability to cope with another terrorist attack or a natural disaster amid concerns that power and telecommunications resilience has improved little since September 11, 2001.

On the fifth anniversary of the 9/11 terrorist attack, London’s Financial Times has reported that the US Treasury has asked the President’s working group on financial markets to produce a report detailing the progress made on disaster preparedness in the past five years.

Financial services companies in New York and London have considerably improved the resilience of their operations since the 9/11 attack, and in April of this year, a study by the SEC, the Federal Reserve and the Office of the Comptroller of the Currency, said that financial markets were now considerably more resilient to wide-scale disruptions. At that time, the report said that voluntary initiatives were sufficient and that the regulators did not need to get involved.

But now, despite the firms’ own efforts, many are concerned that the utilities, principally power and telecomms, on which the markets depend, have made less progress. Wall Street firms blamed many of their problems in 2001 on damage to one of Verizon’s five switching centres in Lower Manhattan.

Scott Parsons, US deputy assistant Treasury Secretary, said the utilities had made "tremendous improvements" but added: "We remain concerned about how to provide better resilience in telecommunications, which is the financial sector’s single biggest dependency."

The April paper also said that firms were also reviewing their business continuity arrangements to cope with a possible widespread outbreak of avian flu and are working to find ways to contain the spread of influenza, protect employees and maintain continuity of critical operations. However it is believed that Paulson is looking for more progress in this area.