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Five Steps of Business Continuity Planning for Investment Firms

By Mary Beth Hamilton | Thursday, January 14th, 2016

Many years ago, business continuity plans were a nice-to-have feature for investment management firms. Only the largest and wealthiest firms employed them. In today's landscape, however, investors and regulators alike expect and demand that firms implement preparedness plans for disasters and cyber-attacks. BCP plans, therefore, are no longer optional. 

The key to a successful business continuity plan lies in understanding the impact a disaster situation could have on a business and creating policies to respond to any such impact. Here are the five key steps to this plan:

Five Steps to Business Continuity Planninghedge fund business continuity, BCP hedge funds, hedge fund disaster recovery, hedge fund BCP

To create an effective business continuity plan, a firm should take these five steps:

Step 1: Risk Assessment

This phase includes:

  • Evaluating physical on-site security and conducting walkthroughs

  • Reviewing physical and network single points of failure

  • Evaluating the impact of various business disruption scenarios

  • Defining the probability of a risk occurring based on a rating system

  • Prioritizing findings

  • Developing a roadmap

Step 2: Business Impact Analysis (BIA)

During this phase we collect information on:

  • Recovery assumptions, including Recovery Point Objectives (RPO) and Recovery Time Objectives (RTO)

  • Critical business processes and workflows as well as the supporting production applications

  • Interdependencies, both internal and external

  • Critical staff including backups, skill sets, primary and secondary contacts

  • Future endeavors that may impact recovery

  • Special circumstances

Step 3: Hedge Fund Business Continuity Plan Development

This phase includes:

  • Obtaining executive sign-off of Business Impact Analysis

  • Synthesizing the Risk Assessment and BIA findings to create an actionable and thorough plan

  • Developing department, division and site level plans

  • Reviewing plan with key stakeholders to finalize and distribute

Step 4:  Plan Implementation

This phase centers on:

  • Distributing the plan to all key stakeholders

  • Conducting training sessions to help ensure employees are comfortable with the steps outlined in the plan

Step 5: Plan Testing & Maintenance

The final critical element of a BCP is ensuring that it is tested and maintained on a regular basis. This includes:

  • Conducting periodic table top and simulation exercises to ensure key stakeholders are comfortable with the plan steps

  • Executing bi-annual plan reviews

  • Performing annual Business Impact Assessments

The Business Continuity Planning Guidebook

For more on investment firm business continuity planning, check out our “Establishing Business Continuity and Disaster Recovery Plans—A Hedge Fund Manager's Guide.”

Or contact Eze Castle Integration to speak with one of our certified business continuity planners about best practices or to learn about why leading hedge funds rely on Eze Business Continuity Planning Services

Recent Hedge Fund Business Continuity & Hedge Fund Disaster Recovery Articles:

BCP Guidebook for Hedge Funds 


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