The Securities and Exchange Commission seems to be awfully worried about disasters lately. On August 16, 2013, the SEC joined the Commodity Futures Trading Commission’s Division of Swap Dealers and Intermediary Oversight and the Financial Industry Regulatory Authority in issuing a Staff Advisory on business continuity and disaster recovery planning. Less than two weeks later, the SEC issued a Risk Alert on investment advisers’ business continuity and disaster recovery planning. This focus on the business continuity and disaster recovery is prompted by the coming one-year anniversary of Hurricane Sandy, which had a devastating effect on many businesses.
As the SEC noted in its August 16, 2013 and August 27, 2013 press releases, the Staff Advisory and Risk Alert make observations and suggest effective practices to address:
- Preparation for widespread disruption
- Planning for alternative locations
- Telecommunications services and technology
- Communication plans
- Regulatory and compliance considerations
- Preparedness of key vendors
- Reviewing and testing
While the Staff Advisory and Risk Alert focused on the financial industry, they do provide a helpful reminder for all businesses to consider how natural disasters and other disruptive events can impact their businesses as well as useful guidance for planning for potential disruptions. In addition, the Staff Advisory and Risk Alert serve as a reminder for all public companies to consider whether their periodic reports and offering materials provide adequate disclosure, including risk factors, with respect to their exposure to natural disasters and other potential business disruptions.
