Episode 72: Business Continuity and COVID-19

On episode 72 of the CCO Buzz, Sr. Compliance Consultant Kurt Nuñez speaks with us about Business Continuity Plans as they relate to COVID-19.

(GUITAR INTRO)

CCO Buzz: Hello and welcome back to the CCO Buzz! We hope everyone is staying safe and healthy out there. On this episode, Sr. Compliance Consultant Kurt Nuñez is here to discuss something we should all be thinking about in the current landscape; Business Continuity Plans as they relate to COVID-19. We hope you enjoy the episode!

Due to the COVID-19 Virus, many firms are having their employees work from home.  Are there any compliance considerations around this?

Kurt Nuñez: Yes, actually there are many but one of the major ones is the Firm’s Business Continuity Plan. The business continuity plan is the required procedure that basically addresses how the firm will continue to serve clients in the event of a significant business disruption.

CCO Buzz: So it seems many firms will have enacted their BCP.  For those who have, what things should they be doing from a compliance standpoint?

Kurt Nuñez: One of the biggest things that they should be doing right now is treating this enactment of the BCP as an opportunity to review their plan. For example, is the plan proving to be effective? Are there any changes needed? Is someone documenting any plan deficiencies, etc.?  This testing of the plan is an annual requirement.  Firms should be taking the opportunity to see if their plans have been effective in a real scenario and document these findings.

CCO Buzz: How are regulators treating this situation where so many firms are operating under their BCP?              

Kurt Nuñez: Well the SEC is currently surveying firms that are being examined to see if their BCP’s adequately address pandemic emergencies.

CCO Buzz: What types of information is the SEC gathering?

Kurt Nuñez: That’s actually a great question and the SEC’s inquiries give us sort of a road map as to some of the ways firms may need to update their BCPs to address pandemics.  Right now, the SEC is trying to ascertain:

  1. Does the firm have a Business Continuity Plan and, in it’s current state, does it address Pandemics?
  2. If the firm has a BCP, has it activated and implemented it in response to COVID-19, and if it has,
    1. What aspects of the plan have been implemented?
    2. Whether the firm has identified any preliminary weaknesses or unforeseen issues since implementing their BCP?
    3. Whether the firm has encountered any limitations in its ability to operate critical systems or conduct critical operations in connection with its personnel working remotely?
    4. And whether working remotely has affected the firm’s oversight of any of its third-party vendors or service providers?
    5. Does the firm’s BCP efforts address the resiliency practices of these key third-party vendors, service providers, and business partners, and is the firm prepared to have all of its personnel operate remotely for several weeks or months, if required or appropriate?
    6. And lastly, does the firm have some kind of contingency plan if essential personnel are unable to work for several weeks or months? For example, personnel may be incapacitated due to the pandemic, or are only able to work part-time if they are caring for their children.

These are some of the things that the SEC has an interest in and again, we can use this as a roadmap when updating our BCP’s to address pandemics.

CCO Buzz: Well it sounds like most firms are going to need to do some updating to their BCPs, is that true?

Kurt Nuñez: Yes that’s true, much the way we had to after Hurricane Sandy, when we realized that firms needed to take a more geographically regionalized approach to their BCPs rather than [taking a] localized [approach].

CCO Buzz: Do you have any tips or takeaways on how to address BCP deficiencies and specifically pandemics once a firm begins working on revising their BCPs?

Kurt Nuñez: I would certainly look to the questions that the SEC has been asking firms and use that as a template for what needs to be addressed regarding the pandemics.  I would also involve all employees in the BCP revision process.  Your employees will have insight into deficiencies and solutions that firm management might not be considering. 

CCO Buzz: Great, any last thoughts?

Kurt Nuñez: Well, in the event firms are having difficulty with this process, Core Compliance & Legal Services can provide assistance with revising and updating your BCP.  As always, we can be reached at 619-278-0020, and provide any assistance you might need.

CCO Buzz: Well that’s it for this week’s episode. If you’d like additional information, please check out our website at www.corecls.com. You can also follow us on Facebook, LinkedIn, or Twitter @CoreCls. Thank you, and we hope you tune-in to next week's episode of the CCO Buzz.

 

(GUITAR OUTRO)