Boston September 14, 2001 Although sadness is pervasive within the Financial Services community and across the nation, there is also confidence in the strength of the underlying systems and operations. Industry sources indicate that fund management systems were not compromised, nor were trading exchanges damaged. The mass exodus from Wall Street was a sad necessity so emergency crews can do their job, but the exchanges and trading systems, though closed, are fully operational.
The reason: Financial institutions in the United States and abroad have built industrial-strength information technology systems. Over the past decade, they have created architectures that are fully redundant to ensure data safety. That redundancy means they have not only software, but also total hardware and site backup, as well. Robust disaster recovery plans are, in fact, the distinguishing hallmark of the global financial community be it a fund company, Visa or Citibank.
These systems are regularly tested and fundamentally integrated and ingrained into the operations of these companies. It's possible that there may be some delay in getting real-time data over the next week or two, but the system-of-record and transaction data itself is secure. Although up-to-the-minute real time data feeds and analytics are useful, most are capable of managing without them. Treasurers have strategies in place for dealing with the unexpected, relying on overnight money markets to park excess liquidity and to their principal financial institutions for credits to bring them through the Christmas season. The good news is the Federal Reserve and central banks around the world are introducing more liquidity into the system which should have a stabilizing effect and provide significantly more alternatives for managing risk and cash management portfolios.