On
Tuesday, thousands of people at 87 of London’s
biggest banks, exchanges and other institutions are going
to try to find out.
Led by the Financial Services Authority, they will be
engaging in a war game that envisions two simultaneous
problems: widespread travel disruptions and a major
cyberattack. Starting at
8am, the FSA will send out
bulletins explaining what has gone wrong and teams at each
institution will try to respond. The scenarios could include
a complete shutdown of the London Underground to the failure
of the network of cash machines or a combination of the two.
Some banks have put as many as 70 people on alert,
while smaller institutions are devoting only a handful to
the FSA’s sixth “marketwide exercise”. The
last two exercises, in 2006 and 2009, focused on a flu
pandemic and severe weather disruptions respectively. This
year’s version is tentatively pegged to market conditions
on August 3,
2012, smack in the middle of London’s hosting of
the Olympic games.
The FSA said: “The marketwide exercise is carried out
to assess and improve the resilience of the financial
services sector, during a major operational disruption and
is an important part of planning for major disruptions.
There are no ‘passes’ or ‘fails’ – the exercise is about
firms assessing their business continuity systems and
updating them where necessary and the authorities
identifying areas for further attention.”
The FSA war games, which are run jointly with the Bank of England
and the Treasury, are among the largest of any financial
sector in the world, with more than 5,000 participants in
2008. They are designed to test business continuity
plans at British financial institutions as well as the
London outposts of large global firms.
While recent FSA war games focus on external
disruptions,
UK regulators have also run
separate exercises looking at financial market woes.
A 2004 version envisioned
the withdrawal of foreign funding from banks like Northern
Rock, a scenario that came uncomfortably close to
predicting real events three years later.
The firms’ performances on the day and responses to a
series of questionnaires over the next two weeks will be
compiled into a report
in January that will summarise the results and suggest
changes that can be made to improve resilience. Previous
war games have led to efforts to improve remote access for
key bank employees as well as the gathering of more
information on employee routes to work
so firms have
a better sense of who the absentees are likely to be.