ZD Net Asia
17th Jan 2008
By Nathaniel Forbes
Thousands of innocent bankers could perish in Singapore’s next financial sector disaster exercise in 3Q 2008, when the Standing Committee on Business Continuity Management of Association of Banks in Singapore (ABS) is planning to simulate the late stages of an infectious disease epidemic on the island. The ABS' decision should come this month.
No event in Singapore can be taken seriously until it has an acronym, so an exercise for the Lion City’s entire financial sector is called an “industry-wide exercise,” or “IWE.”
The ABS committee favors a multi-day IWE spread over two (2) weeks. The U.K. ran a financial sector pandemic scenario, “Exercise Winter Willow”, over three weeks from January 30 to February 20, 2007, and a similar exercise in the U.S.A. in September and October also lasted three weeks. Members of the ABS committee, who represent big local and global financial institutions, participated in one or both of those exercises and have concluded that three weeks is too long. Senior management loses interest.
Committee members also remember the good, the bad and the ugly about Singapore’s first IWE in May, 2006. One thousand people participated, including head office honcho’s and a hundred observers from all over the world. Banks prepared and practiced extensively in advance, which raised the resilience level of an industry sector that contributes 11% of Singapore’s GDP and employs about 200,000 people.
But the scenario – a series of terrorist bombings around the financial district – was not credible and erratically executed, and the whole event was very expensive. No one in Singapore thinks anyone could plant five bombs in the financial district undetected by the nation’s omnipresent security services. Network transmission problems meant several participants couldn’t receive the online scenario delivery, and became frustrated at being out-of-synch. Flying consultants back-and-forth from the U.K. must have contributed to KPMG’s eye-popping consulting fee of $1.3 million to put on the exercise. The government’s Monetary Authority of Singapore (MAS) picked up half the tab, but every financial institution in town got a bill for its share of the fun. The major banks each got a bill for SGD 45,000 (USD 30,000).
Costs are always an issue for famously frugal Singaporeans, but lack of funds is definitely not the government’s problem: Singapore’s Government Investment Corporation (GIC) just this week paid US$6.8 billion for 4 percent of Citibank, and last year paid US$9.75 billion for 9 percent of Europe’s UBS.
The ABS BCM committee’s first priority in 2008 will be to localize any disease scenario for a country with just four million people - but 400 licensed financial institutions and 200 insurance companies and brokers - on an island only forty kilometers (26 miles) wide. With help from the MAS, the ABS will rope in the Ministry of Health, Singapore Civil Defence Force and other public-sector entities to add realism.
The committee’s second priority will be to save money by using local talent to run the event. The ABS is looking for a project manager to run the thing, supported by an entity or company that can act as the support staff. There is no shortage of competent, experienced BCM professionals in Singapore, but finding a firm with both the relevant experience and the resources to pull this off will be challenging.
A plausible scenario and professional execution at a reasonable price are prerequisites for any exercise. The key to making Singapore’s 2008 IWE genuinely useful to the country and the participants, however, will be getting bank executives to feel viscerally, over a sustained period, the consequences of losing as many as half their employees and customers - temporarily or permanently, but simultaneously - to disease. An intellectual challenge won’t be enough; there’s got to be at least the illusion of pain, enough pain to make any banker feverish.
http://www.zdnetasia.com/blog/bcp/0,39056819,63001828,00.htm
