Business Continuity Planning - 10 tips to help alternatives managers protect their businesses as Covid continues

13 January 2022 - Over the last two years there has been a significant evolution in many of the operational processes that contribute to the smooth functioning of alternative investment managers’ businesses.

The start of the pandemic reminded everyone of the importance of watertight business continuity planning (BCP), bringing both business continuity plans and disaster recovery plans to the forefront of institutional investors’ minds.

Asset servicers are there to help, functioning as a manager’s operational backbone. Their ability to seamlessly implement BCP for clients to ensure they are operationally resilient is of the utmost importance for the safeguarding of trillions of dollars’ worth of alternative assets.

In order to provide this for clients, asset servicers have focused on analyzing which solutions across functions such as middle and back office can be improved and made more resilient using technology such as the cloud, automation and data, as well as looking at how to more effectively plan for future disruption.

The good news is there are a number of core steps managers and their asset servicers can take to ensure this operational resilience is in place. Below we outline 10 best practices and post-pandemic reminders that can help ensure business continuity is achieved.

Invest properly in your business continuity plan. There are many ways to do this, but some top examples are making sure it contains a wide variety of disaster response options, plans for the relocation of employees, communications planning and the creation of a crisis management team to instigate actions when the plan is initiated.

Perform a business impact analysis (BIA) to identify and define your critical operations and thresholds. This ensures that you understand all parts of your business, what they need in order to operate, and the prioritization of each in any type of crisis.

Evaluate your risks. They should be location specific, and include external and internal dependencies. In particular, it is vital to carefully consider how a hybrid working model can be implemented securely. 

Evaluate your business continuity plan for required updates. Making sure that it is up to date based on guidelines from local and national authorities is imperative. 

Have a dedicated cyber security team that conducts scenario planning and preparation for cyber security incidents. There has been a significant rise in cyber-attacks of all kinds, but most notably phishing and ransomware during the pandemic.

Discuss your plan and communicate with your firm’s BCP committee through regular meetings. These meetings should go over different scenarios the firm may face at present/in the near future and how to handle them. This is especially important for firms who are still entirely working from home or using a hybrid working model.

Establish a crisis management team if you do not already have one. Agree how crisis communications should be relayed to different stakeholders, have templates readymade and comprehensive communication tools available for efficient and controlled distribution of information.

Revisit and regularly test your disaster recovery plan. Regardless of whether you are operating using a full data center, or an office level / file server type environment, making sure that you continue to test your recovery plan is the only way you can be confident that it works.

Regularly evaluate your policies, communicate new policies that have come into play, and make sure all are well defined and documented.

Consider a tool to help make business continuity planning easier. There are a range of different software providers with tools that can assist in generating these plans and risk assessments at the click of a button after inputting the necessary data. This can be incredibly helpful, particularly if you are managing a large environment across multiple locations.

The pandemic has reminded us of the essential nature of BCP, and as we continue to encounter new challenges as a result of new COVID variants, continuous testing and refining is critical.

While the unknowns are always out there, we hope these steps can help managers prepare for the unexpected.

By Emily Kirkpatrick, Executive Vice President, Business Continuity Management, Citco Technology Management Inc.