Protecting Financial Services' Soft Underbelly

If terrorists were to strike again at the heart of the U.S. financial industry, one IT consultant believes, those attacks would be far more precise than the ones that occurred Sept. 11.

Peter Vinella, CEO of IT consultancy Neoris FS in Miami, said terrorists could destroy the major telephone switching stations in midtown and downtown Manhattan over which most financial institutions interact on leased, point-to-point phone lines.

Other attacks could include placing erroneous electronic trades or other transactions into the financial system.

"The first thing for firms to do is look outside the walls. You can have 100% of your infrastructure up internally, but if your financial utilities are not up, you can't do business," said Vinella. "Externally, you should set ground rules before getting too internal in your planning."

While many players in the financial services industry "are still trying to figure out" the best ways to approach disaster recovery planning, "most firms are much more advanced in their planning" than they had been prior to Sept. 11, said Larry Tabb, an analyst at TowerGroup in Needham, Mass.

"The important thing is handling the operations," he said. "I think they're moving forward with a deliberate pace -- not a superaccelerated pace, but they're not sitting on their hands, either."

Damon Kovelsky, an analyst at Meridien Research Inc. in Newton, Mass., said he doesn't believe terrorists would spend time targeting individual firms or systems based on their lack of backup capabilities, preferring instead to make more symbolic strikes.

"Whenever they planned this [Sept. 11]\ thing out, they didn't think, 'Brokerage XYZ has a crappy backup system, so let's target them,' " he said.

Copyright © 2002 IDG Communications, Inc.

  
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