Today there is no excuse for a hedge fund not to have a disaster recovery plan in place. Both investors and regulators have raised their expectations and want to be sure that appropriate safeguards are in place.
Private cloud solutions are ideally suited to meet a hedge fund’s requirements for backup storage and disaster recovery (DR) solutions. Additionally, the growing acceptance of cloud-based services has driven down the costs substantially, making these solutions highly economical for funds of all sizes.
While business continuity planning (BCP) focuses on the people and processes needed to keep a hedge fund or investment firm in business – such as selecting a backup work site for staffers in an emergency – DR solutions emphasize the technology necessary to support a firm’s operations. In both areas, firms need to understand their operational processes and specific risk landscapes.
When it comes to backup file storage and DR planning, cloud solutions have an inherent advantage over on-premises systems, because mission-critical client and transaction data, as well as the financial applications, are stored off site. If a firm’s office is damaged by flood, fire, windstorm, for instance, or inaccessible because of loss of power or human threat, day-to-day operations can continue with minimal interruption. At Eze Castle Integration we advise clients to test their DR systems quarterly to help ensure users are comfortable logging in and that the DR environment matches the primary location files and applications. It’s always better to resolve any DR issues in a practice situation, rather than a real-life crisis.
Private cloud solutions offer other important DR advantages, including faster restoration of services. Instead of purchasing new equipment, reinstalling applications and reloading client data, a cloud provider can simply “turn on” its service at the firm’s temporary location. Additionally, virtual servers are easily portable between physical host servers, and virtualization of critical applications for the cloud environment can also minimize downtime after an incident.
Virtualization technology also allows firms to take snapshot images of their servers and desktops and store that information in a safe and secure location, such as a storage area network (SAN). In a disaster situation, those snapshots can be restored to another server located away from the disaster area.
Because cloud providers differ in how they handle backups and DR situations, it’s important to ask the right questions to be sure the provider has the internal resources, scale and flexibility to handle a firm’s worst-case scenario. In the event of a large-scale disaster, does the provider have the staff and the infrastructure to bring up a dozen or more clients at the same time? And what happens if the provider’s primary location is also affected – does the provider have its own BCP and DR plans in place?
An experienced provider can help a hedge fund identify its major risks and develop effective strategies to address those issues.