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NASAA Says Business Continuity Plans Are a Must-Have

By Matt Donahue | Tuesday, May 12th, 2015

Recently, the North American Securities Administrators Association (NASAA) has implemented new requirements on state registered advisors regarding firms' business preparedness plans. Specifically, the rule requires firms to establish, implement, and maintain both a Business Continuity and Succession Plan. 
Whether firms have existing plans already in place or are developing plans for the first time, they must ensure plans are in line with the NASAA’s new Model Rule regulations and guidance. Below are the specific areas identified as part of the new rule:

  1. The protection, backup, and recovery of books and records.

  2. Alternate means of communications with customers, key personnel, employees, vendors, service providers (including third-party custodians), and regulators, including, but not limited to, providing notice of a significant business interruption or the death or unavailability of key personnel or other disruptions or cessation of business activities.

  3. Office relocation in the event of temporary or permanent loss of a principal place of business.

  4. Assignment of duties to qualified responsible persons in the event of the death or unavailability of key personnel.

  5. Otherwise minimizing service disruptions and client harm that could result from a sudden significant business interruption.

When developing business continuity and succession plans, firms must ensure they not only meet the requirements laid out in the Model rule, but are also in compliance with any state-specific Business Continuity Plan and Succession regulatory requirements.  
Failure to enact proper planning or documentation could result in regulatory consequences, limit vital business functions, and ultimately tarnish a firm’s reputation. Proper documentation will not ensure continuity on its own. Plans should specifically outline and identify designated successors, vital processes and documentation, as well as essential relationships with clients and regulators/external entities. 
To better understand some of the implications and issues that may arise, the NASAA has provided some hypothetical situations/topics including disaster planning, loss of key personnel planning, and sole proprietor planning. Click here to see examples (Page 13).

Additional Resources on BCP Planning:

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