Experts Weigh In On Hedge Fund Disaster Recovery, Business Continuity Planning
Welcome to part two of our recap of the 4th Annual Hedge Fund Ops & Tech conference in NYC. Last week I wrote about headline risk, employee trading and Dodd-Frank – all of which were hot topics at the event.
Today’s post will focus on the topics discussed on the “Business Continuity & Disaster Recovery Planning for Hedge Funds” panel that was moderated by Vinod Paul of Eze Castle Integration and featured panelists Jeremy Garber, COO at Longacre Fund Management, and Kate Chigounis, Associate Director of Operational Risk Management at Delaware Investments.
The panel started with a discussion of what keeps hedge fund professionals up at night and the common theme was ensuring that all systems will be up and running when the trading day begins. Outages are unacceptable, costly and largely preventable with proper planning.
When conversation moved to the SEC and Dodd-Frank Act panelists commented that meeting the SEC’s bare minimum requirements, including data backup, archiving and retention, do not necessarily equate to being disaster ready. A hedge fund should have critical data replicated off-site and available for rapid recovery. Additionally when looking at archiving files should be saved in a WORM format (write once, read many). Panelists also advised that firms should plan for not knowing what the SEC will ask for next and look to their own business requirements and industry best practices to guide future plans.
In addition to developing a solid internal disaster recovery system and business continuity plan, hedge funds must look at their third party providers as risk points. Hedge funds should ask to review their service providers’ disaster recovery plans and have a strong understanding of the providers' Recovery Time Objectives (RTO) and Recovery Point Objectives (RPO). In addition, a hedge fund should ask for results from the service provider’s most recent disaster recovery test, which should have been conducted within the last year.
Focusing on disaster recovery and business continuity testing, panelists stressed the importance of actually testing plans and systems to ensure they work and that employees are comfortable. At the minimum hedge funds should conduct annual tests, however, Eze Castle Integration actually recommends clients test quarterly and has compiled a list of frequently asked questions about disaster recovery testing.
The final topic covered centered on the costs of registration. Panelists focused on the increased costs around fortifying a hedge fund’s technology operations. For example, moving from daily backup of data to near real-time replication adds a new expense but is something that hedge funds and their investors are viewing as standard business protocol.
At Eze Castle Integration we are experts on disaster recovery and business continuity planning and not only offer solutions but also numerous articles on the topic, so be sure to check out the following: