FSSCC Says 'Avian Flu' Outbreak Poses Unique Threat; Council Issues Paper Outlining Guidelines to Prepare Financial Industry

NEW YORK--(BUSINESS WIRE)--Jan. 24, 2006--A serious outbreak of illness such as "avian flu" could cause problems for business and the financial services industry that are quite distinct from the business continuity issues posed by disruptions associated with natural disasters, according to a paper issued today by a homeland security financial industry council charged with planning for infrastructure protection.

In the paper, which discusses issues that financial institutions may need to face in the event of a widespread avian flu outbreak, the Financial Services Sector Coordinating Council for Critical Infrastructure Protection and Homeland Security (FSSCC) said that a number of financial institutions are concerned that their current planning for business continuity may not address the unusual circumstances that could arise during an outbreak of flu or other highly infectious disease.

For example, according to the council's paper, a serious avian flu outbreak could erupt in waves over weeks or even months, with some waves appearing to be mild, only to be followed by others that are much more severe.

"Even after a particular wave appears to subside, follow-up waves could develop after safeguards are relaxed," the paper said, suggesting that the timeframe for coping with an epidemic could be much longer than the U.S. has experienced in dealing with natural disasters.

As a result, according to the paper -- "Issues for Consideration Regarding Preparation for 'Avian Flu'" -- organizations may have to deal with significant absenteeism for weeks at a time from illness, family demands or fear of contagion. Personnel absences may become extensive enough to require firms to alter contingency plans for maintaining critical operations.

Compounding the problem, the paper notes, is that if an avian flu outbreak reaches epidemic proportions, it's likely to affect multiple regions of the country and the globe at the same time. Consequently, the paper says, "the backup facilities that many financial organizations have established -- even remote sites hundreds of miles distant from primary facilities -- may be just as affected by the outbreak as the primary locations they are intended to back up."

Another consideration that financial service organizations need to plan for, the paper said, is that the same absenteeism issues are likely to spread to power systems, transportation, telecommunications, waterworks -- even police, fire and emergency medical services. These types of problems would present additional complications for contingency planning that firms need to address.

"It's important to point out," noted Donald F. Donahue, Chairman of the FSSCC and Sector Coordinator for Banking and Finance, "that, at this time, an epidemic or pandemic of 'avian flu' remains a possibility, not a fact. While we do not want to create a sense of panic, FSSCC believes that heightened awareness and preparation is a prudent course for us to take.

"Even if a highly communicable form of 'avian flu' develops," Donahue said, "we do not know how virulent the virus would be, nor how serious its effects would be."

The council cautioned that financial service organizations ought to reexamine their current business continuity plans with an eye to surviving a long-running outbreak of a highly infectious disease. Among the plans the FSSCC recommends that organizations review include:

-- Identifying which operations could be suspended and which are critical, keeping in mind that activities such as payroll and administrative functions, which are often suspended during short-term disasters or emergencies, may need to be kept functioning in order to sustain the organization.

-- Splitting and segregating critical staff into separate offices or locations, and planning for possible governmental actions (such as school closings or travel restrictions) that would cause larger numbers of staff to stay home.

-- Expanded telecommuting, although that raises issues such as costs, advance preparations and even the sustained quality of online services during a long-term outbreak.

-- More use of teleconferencing and videoconferencing to avoid travel and the need for face-to-face meetings.

-- Limits on long-distance travel and the possible need for special local travel arrangements for critical staff commuting to and from workplaces.

-- Stepped up security because police and other security services may be compromised by illness and absenteeism.

-- More timely information-gathering systems to keep track of employee absenteeism or work-at-home situations.

-- Emergency plans that can be phased in to deal with various degrees of an influenza outbreak, both locally and on a broader basis.

-- Communication strategies to prepare statements in advance and to reach employees and inform external parties such as regulators, customers, suppliers, trading parties and the public.

-- Coordination with local emergency management organizations in order to track such potential governmental actions as shutdowns of public transportation, or the imposition of "snow days" to limit public exposure to the virus.

-- Employee health and safety issues, including reliable information sources for the latest medical developments, medical or other health care expertise, and vaccination programs.

-- Testing and monitoring programs to scan for possible employee contagion or infection, or to isolate employees who become suddenly ill.

-- Legal review of business continuity and employee safety arrangements to ensure compliance with personnel and privacy laws and regulations.

-- Budget and administrative questions, such as the stockpiling of supplies or advancing administrative leave to large numbers of employees.

While some scenarios suppose that an outbreak would first occur overseas, so that U.S. organizations would have some advance warning, it is quite likely that the actual warning period prior to an outbreak in the United States could be brief, the council said in its statement.

FSSCC is issuing this paper, Donahue explained, to share some of the thinking evolving in the financial service industry about how issues raised by an epidemic or pandemic "are quite distinct" from issues posed by natural disasters or deliberate malicious activity.

"Business continuity planning needs to encompass the long-term and sometimes large-scale disruptions that an outbreak of 'avian flu' might cause, and our aim is to help financial institutions in thinking through and addressing the issues their specific organization might face," Donahue said.

A copy of the FSSCC statement and paper on "Avian Flu" can be accessed at http://www.fsscc.org/index.html.

About the Financial Services Sector Coordinating Council for Critical Infrastructure Protection and Homeland Security (CIP/HLS)

The Financial Services Sector Coordinating Council for Critical Infrastructure Protection and Homeland Security (www.fsscc.org) is a group of private sector firms and financial trade associations that works to help reinforce the financial services sector's resilience against terrorist attacks and other threats to the nation's financial infrastructure. In this capacity, the Council works with the Department of the Treasury, which has direct responsibility for infrastructure protection and homeland security efforts for the financial services sector. It serves under the overall guidance of the Department for Homeland Security, under Homeland Security Presidential Directive 7.

Since most of the sector is privately owned, the Treasury appoints a private-sector Coordinator with whom to work on these issues. Treasury Secretary John Snow appointed Mr. Donahue to this role in May 2004. The Sector Coordinator also serves as Chairman of the Council.

The Council members include:
America's Community Bankers
American Bankers Association
American Council of Life Insurers
American Insurance Association
American Society for Industrial Security International
BITS/The Financial Services Roundtable
Chicago Mercantile Exchange
CLS Group
Consumers Bankers Association
Credit Union National Association
The Depository Trust & Clearing Corporation
Fannie Mae
Financial Services Information Sharing and Analysis Center, LLC
Futures Industry Association
Independent Community Bankers of America
Investment Company Institute
Managed Funds Association
The NASDAQ Stock Market, Inc.
National Association of Federal Credit Unions
National Association of Securities Dealers (NASD)
NACHA - The Electronic Payments Association
New York Board of Trade
The Clearing House
Securities Industry Association
Securities Industry Automation Corporation
The Bond Market Association
The Options Clearing Corporation

Stuart Z. Goldstein, 212-855-5470
James Conmy, 212-855-5477