Talk About the Weather: Addressing FINRA’S Focus, 2018

Recent natural disasters and weather events make the need for business continuity plans (BCPs) more evident than ever before. If not for their “real-world” ready business continuity plans, many investment firms would have been forced to fully shut down due to one of last year’s hurricanes or this year’s nor’easters.

In the investment management world, where the markets seldom close because of external events (Sandy in 2012 was the first time in 124 years that the New York Stock Exchange was shut down for two full days) firms need to arm themselves with the proper tools to stay open under all circumstances. And in our experience, even BCP-ready firms can be at risk when disasters strike; untested plans can be derailed by easily-overlooked details, such as device-specific remote access settings.

As a protective measure against potential business disruption, FINRA announced plans to emphasize business continuity in its 2018 exams. As investment managers establish compliance with FINRA’s business continuity guidelines, here are some things to keep in mind:

1. Enable Remote Access

Cloud access to data and enterprise technology lessens the impact of crisis situations. Investment management firms with a cloud-enabled operating platform can securely access their data and apps at any time. Secure-cloud technology is nimble and responsive, and protects against business interruptions in the event of natural disaster.

2. Over Communicate

When it comes to continuity plans, investment management firms need to master all aspects of the communication spectrum – including partners, employees and clients. Third-party partners and vendors play an integral role in business continuity planning, because their systems are often responsible for downstream investment operations. Firms need to communicate and coordinate their plan such that, up front, everyone knows their responsibilities and, during an event, everyone is kept informed of ongoing business activity. For firms with a small operations/technology footprint, access to business oversight tools – and a window into vendors’ BCPs – are principal information sources for emergency-related employee and client communications.

3. Trust Experience

It’s one thing to establish a coordinated plan, consistently review procedures, and establish communication protocols. It’s another one entirely to test the business continuity plan under simulated circumstances. Evoking end-to-end BCP deployments is, in some cases, the only way to identify and close gaps in the BCP. In this, expect consistent support from any business partners.

Compliance with FINRA guidelines regarding business continuity is non-negotiable. But it need not be overly burdensome. There are tangible benefits to a secure-cloud enabled investment management operating model. Archer amplifies the benefits of the cloud-based operating model, with a proprietary ecosystem of industry-leading applications which are fully supported by award-winning operations expertise.