The Survivals of eCommerce Systems After the WTC Attacks

1. The Survivals of eCommerce Systems After the WTC Attacks John R. Harrald, Ph.D. Youn Hee Kim, M.S. Institute for Crisis, Disaster, and Risk Management The George Washington University Supported by NSF Grant CMS 0219953

2. Contents • Project overview • Research method • eCommerce system recovery overview at WTC • Technology for surviving • Future research tasks

3. September 11, 2001

4. September 11, 2001 • 19 terrorists hijacked 4 aircraft for suicide attacks • Almost 3000 people killed • In Manhattan: - 34.5 million ft2 office space lost - $50-70 billion in insured losses • Most of these direct economic losses were incurred by the private sector

5. Terrorist Groups are Targeting U.S. and World Economy “The settlement of this overburdened account will indeed be heavy. We will also aim to continue, by permission of Allah, the destruction of the American economy.” Ayman Al-Zawahiri, head of Al-Qaeda operational planning (6 October, 2002)

6. Project overview • National Science Foundation Funded the study: Financial and Strategic impacts of the attacks on large publicly held corporations. • Project consists of three sections • Section 1: Organizational strategies for coping with extreme events • Sections 2: System recovery from extreme events • Section 3: Defining of a common body of knowledge for executive level crisis managements of extreme events

7. Research method • Select target companies out of 330 companies in WTC • Compare the financial performance for 18 months by using stock price. • Conduct personal interviews and surveys to CEOs, CIOs and other executive officers and technical personnel • Analyze data and compare the result of three sections

8. Selection of Companies GOAL: To sort through the thousands of companies that had been directly affected by the attacks in order to formulate a list of 20 and 25 companies to be studied www.tenantwise.com

9. Results • Company 30, Fast Recovery Example

10. Results Company 33, Non-Recovery Example

11. Results Ranked Average change in Stock price between 9/11/2001 & 3/11/2003

12. Research method for the section 2: system recovery from extreme events

13. eCommerce system recovery overview at WTC • Merrill Lynch, one of the largest investment firm • Number of employees lost : 3 • Amount of office space lost: 2,083,555 • Physical location affected: 4 World Financial Center, Whole Building • 2002 revenue: $28.5billion • Headquarters: 4 World Financial Center, New York, NY 10080

14. eCommerce system recovery overview at WTC • Merrill Lynch, one of the largest investment firm • Returned back to work within 24hours • Transferring trading operations to London, Tokyo and Hong Kong • Used their web site to communicate relocation and emergency transportation information to employees

15. Merrill Lynch stock performance

16. eCommerce system recovery overview at WTC • Citigroup • Number of employees lost: 3 • Amount of office space lost : 7 WTC (7 WTC was leased to Citicorp) • 2002 net income before taxes: $ 20.537 billion • Headquarters: Citigroup Inc. 399 Park Avenue, New York, NY, 10043

17. eCommerce system recovery overview at WTC • Citigroup • Returned back to work within 24 hours • Transferred Series of computer and backup data to another branches (as far as London) • Obtain a spare office location for emergency use

18. eCommerce system recovery overview at WTC • Marsh & McLennan Cos. • Number of employees: 295 (mostly, IT staffs) • Amount of office space lost: 600,000 sq.ft. (North Tower, Floors 93-100 ) • 2002 revenue: $10.4 billion • Headquarters: 1166 Avenue of the Americas, New York City, NY

19. eCommerce system recovery overview at WTC • Marsh & McLennan Cos. • Came back to work few days after the attack • Using the international structure, the firm quickly pulled lost data from other locations • Relocated workers to New Jersey and Pennsylvania within 7-10 days

20. Marsh & McLennan stock performance

21. eCommerce system recovery overview at WTC • NYBOT(New York Board Of Trade) • Parent company of coffee, sugar and cocoa exchange Inc.(CSCE) and the New York Cotton Exchange (NYCE). • Lost its primary trading facility in WTC • Lost the main trading machines in WTC

22. eCommerce system recovery overview at WTC • NYBOT(New York Board Of Trade) • Returned back to the normal situation after 7 days (Monday, Sept. 17th) • Prepared the hot site with Comdisco (commercial disaster recovery service bureau in 1993, $300,000 maintain cost/year) • Adding 700 phone line and 20 T-1 to thehot site and run the business.

23. Critical Success Factors • Preparedness • Intensive preparation after the WTC bombing in 1993 • NYBOT: started to build the hot site in 1995 • AON: prepared disaster recovery plan • Y2K preparation • Merrill Lynch: prepare the data center for the computer malfunctions.

24. Critical Success Factors • Action • Rapid decision making procedures • Marsh and McLennan: rapidly decided the office relocations and • Knowledgeable technical staffs and vendor's supports • NYBOT: added the phone line and T-1 lines within one day with vendor’s quick supports.

25. Technology for surviving • Mirroring (data shadowing) • Merrill Lynch used this technology to protect critical data as a part of their Y2K preparation • Many e-commerce companies use this technique to transfer the important data • Version and IBM start to service the rerouting calls service from a damaged office to another location

26. Technology for surviving • Clustering/zoning • Isolation technique to prevent localized failure impacting the entire storage system. • Wireless technology • NOBOT: distributed 200 cells to trader after the attack • After the attack, many companies consider wireless network service options for reliable data communications.

27. Technology for surviving • Data redundancy • Successfully recovered companies had a redundancy data (customer records, transactions records) in other locations. • Hot site and cold site is also part of redundancy strategies. • Doing regular data/log back up and save them to multiple places are the key.

28. Next Tasks Determine what caused discrepancies between the outliers, and confirm our findings regarding market absorption of financial loss, Investigate strategic impact on corporations not directly impacted by WTC attack and compare with sample companies. Interviews, surveys will investigate specific eCommerce issues

29. How was it used? Framework for Analysis of Strategic Impacts How did it work? What was learned? What was modified or changed? What was in place? What was improvised? Revised Corporate Strategy Investments in preparedness

30. Expected Results Unique evaluation of financial impacts of WTC attacks on large corporations. Evaluation of corporate preparedness, disaster recovery and business continuity strategies procedures, and technology. Evaluation of survival techniques and Technologies for eCommerce Better understanding of impact of extreme events events on corporate strategy, plans, & investment

31. Questions? For additional information contact John R. Harrald at jharrald@gwu.edu (202) 994-7153 www.gwu.edu/~icdrm