One of the elements of FINRA's BCP rule (Rule 4370) is a financial and operational assessment. This element requires firms to consider operational risk exposure to relevant threats, including a pandemic. Firms need to be prepared for the possible effects of a pandemic, which may include absenteeism, school closings, transportation difficulties and telecommunications slowdowns. Pandemic influenza also may have the ability to impact a geographically diverse area.
2009 Pandemic Survey Results
In 2009 FINRA conducted a voluntary firm survey to determine preparedness for a pandemic in light of current events involving influenza A (H1N1). This survey is part of FINRA's effort to assist firms with business continuity planning by facilitating the exchange of information. See Regulatory Notice 09-59 for pandemic planning best practices based on the results of this survey. FINRA conducted a similar survey following Hurricanes Katrina and Rita in 2005, resulting in NTM 06-74, which provides valuable, real-world insight into the effectiveness of planning and implementing a BCP.
We received responses from 109 firms. The survey results show that for those firms responding:
- almost all conducted a review of the potential impact of a pandemic;
- almost all have a BCP specifically addressing a pandemic;
- the vast majority tested their pandemic plans; and
- many firms' pandemic plans were triggered by declarations or events surrounding influenza A (H1N1).
While the results are generally positive, there remains work to be done for firms to be better prepared for a pandemic. For example, one in five firms did not yet test their pandemic plans. Testing the plan to some extent is an important part of preparation. FINRA examiners are assessing firms' BCPs, looking at how they have taken a possible pandemic into account in their BCPs.
Summary of Results
Below is a summary of the aggregate survey results.
1. Has your firm conducted a review of the potential impact of a pandemic?
2. Does your firm have a business continuity plan specifically addressing a pandemic?
3. If your firm has a specific pandemic plan, has your firm tested the plan?
4. If your firm has tested its pandemic plan, how did the firm perform such tests?
| FSSCC* Pandemic Exercise |
41% |
| Simulation |
13% |
| Other |
46% |
5. Considering current events involving influenza A (H1N1), a/k/a "swine flu," have any portions of your firm's pandemic plan been triggered?
6. If any portions of your firm's pandemic plan have been triggered, what were the trigger points?
| WHO Declaration of Pandemic Phase 4 |
27% |
| WHO Declaration of Pandemic Phase 5 |
4% |
| WHO Declaration of Pandemic Phase 6 |
18% |
| U.S. Federal Declaration of Public Health Emergency |
7% |
| CDC Guidance |
19% |
| Press reports |
6% |
| Other |
20% |
7. If any portions of your firm's pandemic plan have been triggered, what actions or protocols have been activated?
(free text responses)
8. If any portions of your firm's pandemic plan have been triggered, how have these areas of the plan been working?
(Select 1 to 5, where 1 means the plan is working poorly and 5 means the plan is working very well.)
| 1 |
0% |
| 2 |
5% |
| 3 |
6% |
| 4 |
44% |
| 5 |
45% |
9. Has your firm experienced above-average absenteeism?
10. Please describe what your firm believes would be your most significant challenges in the event of a pandemic.
| Absenteeism |
25% |
| Access to online accounts |
1% |
| Commuting |
9% |
| Counterparties |
4% |
| Market volatility |
4% |
| Power disruptions |
2% |
| Provision of customer service |
8% |
| Regulatory filings |
4% |
| Remote work arrangements |
12% |
| Telecommunication disruptions |
12% |
| Trade clearance and settlement |
5% |
| Transportation |
6% |
| Other |
6% |
11. Does your firm's business continuity plan address the most significant challenges identified above?
12. Please describe any regulatory relief your firm believes would be beneficial in the event of a pandemic.
| Books and records |
8% |
| Communications |
6% |
| Continuing education |
10% |
| Credit/margin regulation |
4% |
| Emergency office locations |
9% |
| FOCUS filings |
8% |
| Military personnel/national guard |
2% |
| Qualification examinations |
7% |
| Registration filings |
9% |
| Regulatory filings |
11% |
| Supervision |
9% |
| Trade reporting |
7% |
| Other |
8% |
* Financial Services Sector Coordinating Council.
Pandemic Planning Resources
Papers, Studies and Research Material
- Securities and Exchange Commission Interagency Paper on Sound Practices to Strengthen the Resilience of the U.S. Financial System, April 2003
- Securities and Exchange Commission Joint Report on Efforts of the Private Sector to Implement the Interagency Paper on Sound Practices to Strengthen the Resilience of the U.S. Financial System, April 2006
- Department of Homeland Security: Pandemic Influenza Impact on Communications Network Study, December 2007
- Government Accountability Office: Influenza Pandemic: Key Securities Market Participants Are Making Progress, but Agencies Could Do More to Address Potential Internet Congestion and Encourage Readiness, October 2009
- Government Accountability Office: Influenza Pandemic: Sustaining Focus on the Nation's Planning and Preparedness Efforts, February 2009
- Government Accountability Office: Financial Market Preparedness – Significant Progress Has Been Made, but Pandemic Planning and Other Challenges Remain, March 2007
- Department of the Treasury: Private Sector Release Initial Results of Flu Pandemic Exercise Nearly All Participants Find Critical Gaps in Plans
- Financial and Banking Information Infrastructure Committee – Financial Services Sector Coordinating Council Pandemic Flu Exercise Media Briefing, October 24, 2007
- National Conference of State Legislators: Special Topics Collections – Pandemic
- Bootsma, Martin C. J. and Ferguson, Neil M. "The effect of public health measures on 1918 influenza pandemic in U.S. cities." National Academy of Sciences, April 6, 2007
