1 / 22

Recent Global Crises: Reassessing Business Continuity

Explore the cost of recent global crises, the importance of financial stability, and the need to reassess business continuity management. Learn from past crises and understand the importance of confidence, communications, and relationships. Discover the various threats and their costs, including banking system risks, natural disasters, and cyber-threats. Assess business continuity management and its components, including price stability and financial system stability. Explore examples of disturbances in different countries and examine the importance of assessing and implementing a sound approach to business continuity management. Lastly, consider sectoral cooperation and the role of an umbrella body in contingency planning.

marieroberts
Download Presentation

Recent Global Crises: Reassessing Business Continuity

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. 2003 ACSDA SEMINAR Recent Global Crises and the Need to Reassess Business Continuity Policies and Practices Gill Marcus South African Reserve Bank

  2. RECENT GLOBAL CRISES AND THE NEED TO REASSESS BCM • The cost of recent global crises • The importance of financial stability • Assessing business continuity management • An approach to sectoral cooperation

  3. RECENT FINANCIAL SYSTEM CRISES • What is a financial system crisis? • Crises impacting the global financial system • Y2K, 9/11, Iraq, Brazil, Enron, Blackouts • Lessons learnt • Confidence, communications, relationships

  4. THREATS AND THEIR COSTS • Types of threat • Banking system risks, natural disasters, cyber-threats • Direct costs • Exceeded 15% of GDP in 20 cases in 10 years • Indirect costs • 2 percentage points GDP growth forfeited • Macroeconomic costs

  5. THE IMPORTANCE OF FINANCIAL STABILITY • Mission of the SARB “The achievement and maintenance of financial stability” • Financial stability comprises: • Price stability • Financial system stability

  6. COMPONENTS OF FINANCIAL STABILITY • Price stability • low inflation • low volatility of prices, interest and exchange rates • Financial system stability • efficient institutions and markets • effective regulatory infrastructure • robust financial system/ able to withstand shocks

  7. A possible definition... “. . households, businesses and financial-service firms can reliably hold and transferfinancial assets, without a meaningful risk of disturbances that would undermine financial exchange fundamentally and lead to macroeconomic costs” (Engert and Selody, Bank of Canada) FINANCIAL SYSTEM STABILITY

  8. DISTURBANCES COUNTRIES TRIGGERS/CAUSES - Asset price shock - USA (2000) - Adjustments in equity values - Banking crises - Japan (1998) - Moral hazard - Turkey (2001) - Under-capitalised - Argentina (2001) - Depositor run - Currency crises - East Asia (1997) - Current account - Turkey (2001) - Capital outflows - South Africa (2001) - Contagion - Argentina (2001) - Fixed exchange rate EXAMPLES OF DISTURBANCES

  9. DISTURBANCES COUNTRIES TRIGGERS/CAUSES - Debt crises - Argentina (2001) - Govt. debt default - Japan (2002) - Corp. debt -Financial crisis - USA (1998) - LTCM - Geopolitical crisis - USA, the world - War on Iraq (2003) - Terror attack - USA, 9/11 - Political - Corporate failures - USA/ Europe - Governance (Enron/ Worldcom) breakdown EXAMPLES OF DISTURBANCES

  10. ASSESSING BUSINESS CONTINUITY MANAGEMENT • Objectives and related issues • Detection, management, resolution • An umbrella approach • BCM interrelations • Who would be affected? • Who could affect us? • Who needs to know?

  11. AN UMBRELLA APPROACH TO BCM

  12. BCM INTERRELATIONSHIPS

  13. FRAMEWORK FOR BCM • Develop a policy and framework for BCP • Policies, roles and responsibilities • Planning methodology: tailored,dynamic • Conduct threat and business impact analysis • Identify threats and disaster scenarios • Identify critical business processes and recovery time objectives • Formulate recovery strategies

  14. FRAMEWORK FOR BCM • Conduct Business Continuity Planning and IT Disaster Recovery Planning • Plan development: emphasis on clearing and settlement • Facilitation of BCP testing: • Crisis simulation workshops, independent audit • Review and revise plans • Conduct evaluation and awareness sessions and training

  15. ALTERNATIVE FRAMEWORK FOR BCM

  16. ATTRIBUTES OF A SOUND APPROACH TO BCM • Roles and responsibilities pre-established • Ultimate decision-making authority set • Multilateral information sharing is key • Content and tone of information disclosed -factual and balanced

  17. ATTRIBUTES OF A SOUND APPROACH TO BCM • Self-assessment and self-disclosure of readiness status is vital • Key communication lines pre-established • Primary and alternate communication mechanisms in place

  18. CRITICAL SUCCESS FACTORS FOR BCM • Organisational commitment • Top management commitment and support • Effective multi-disciplinary communication • Free inter-agency cooperation • Transparency • No constraints on information sharing

  19. CRITICAL SUCCESS FACTORS FOR BCM • Good teamwork • Key persons available for planning workshops • Testing and evaluation of preparations and plans • International research and best practice • Realistic simulated crisis management exercises

  20. BCM: SECTORAL VERSUS ORGANISATIONAL CONSIDERATIONS Do “perfect” corporate BCPs translate into “perfect” sectoral BCM? • Related markets • Communication • Settlement • Liquidity

  21. AN APPROACH TO SECTORAL COOPERATION • Set up “umbrella body” (FSCF) to: • Provide a forum for open discussion • Create network of contingency planning contacts • Provide opportunity for strategic initiatives • Work together in a cooperative way • Obtain guidance from regulators • Work with local and international organisations

  22. CONCLUDING REMARKS • The challenge of timely and appropriate intervention: • How much extreme market risk should government absorb? • Was the probability of systemic collapse sufficient to warrant intervention (in hindsight)?

More Related