By Definition, We Cannot Prepare For the Black Swan Completely Business Continuity Plans Always Have Gaps
Authored by Michael VonBevern
Over the past week, I have received over fifty COVID-19 related emails from our vendors, colleagues and centers of influence. All of these firms, I believe, are well run—and they sincerely believe their business continuity plan (BCP) is ready to kick in, if necessary, and save the day.
In my experience, most plans aren’t.
In October 2012, when Superstorm Sandy crippled the east coast, the BCP of my former employer was completely ineffective. We had not considered everyone losing their internet connection (to be able to work from home) or that they couldn’t buy gas for their car to get to work. Personally, I had no internet, no electricity, and a tree down across my driveway – eliminating any possibility of driving to the nearest coffee shop to log into my VPN.
Looking back (and forward) a global pandemic, not seen in the last century, is the definition of a black swan event. As a firm, Socium has activated its BCP and our people are all working from home as our communities strive to “flatten the curve” and reduce everyone’s risk of infection. Our business setup has allowed us to “work from home,” essentially, for the past four years. So, working from home will not be the hole in Socium’s BCP plan—but, I suspect, only time will tell if there is a gap in our plan—in all of our plans.
I’ve learned, in moments like this, to be humble in front of information I do not know and cannot easily predict. Trees, sometimes, end up across driveways—and sometimes there isn’t electricity—despite our best efforts. (FYI, my neighbor had a generator and I hot-spotted into my VPN while waiting for the tree to be removed.) Still, it was a punt. It wasn’t planned.
I’ve learned what many of us learn – outsourcing is an extremely effective form of de-risking your workforce in a BCP, and one more way ensuring your clients remain satisfied. Socium’s clients can rest assured that we are very effective at working and collaborating remotely with each other, and that our outsourced cloud-based software has significant, and tested, backup systems.
When I am asked to consult with a client, I suggest they recognize severely high employee absenteeism may adversely impact their quality and bottom line. Spreading out the work, and process redundancies, —a fund administrator with their own adequate redundancies—ensures the consistent flow of deliverables to your counterparties and investors.
On our website, Socium has long listed the following client benefits, but I’m learning the list is incomplete:
- Due Diligence Support
We should now also add:
- Reduced Key Person Risk
Key person risk has always been an issue in our industry as most asset managers run their shops with as few people as possible. I’ve spent plenty of time on phone calls with Managing Partners worried that their CFOs or COOs are looking for another job. This is always an issue in our industry (and good fund administration makes the transition to a new CFO/COO easy), but in that case, it’s just one replacement.
Outsourcing makes a lot more sense when one’s entire back-office is sick with a virus.
I trust that we will all perform and get through this pandemic, because we will all be required to perform and get through this.
Know that we, like you, test our BCP annually; and that our management team, like yours, now evaluates and tweaks our BCP daily all in an effort to support our clients in any way needed.
Your health, our health, the health of our associates, businesses, clients, partners, our economy and our nation require that we stay alert and informed, but not frightened. Planful, and determined. BCP plans are necessary business plans—like many decisions in business: hope for the best and prepare for the worst.
If Socium, can help you in any way during these challenging times, our doors, and our phones, are always open to you.