Crisis Management

Executive Summary

In 2005, Bank for International Settlements (BIS) came up with 7 high-level principles on business continuity and was issued to various financial industry participants as guidelines. The 7 principles provide a comprehensive overview of the necessary steps for business continuity planning. Financial industry participants are required to develop respective business continuity planning in accordance to the 7 high-level principles.

There are various incidents within the last decade that has resulted in major operational disruption to financial industry. However, with the guidance of the 7 high-level principles, most of the participants were able to cope with crisis well and survive through the crisis. In this report, several case studies were researched and commented on their business continuity planning.

Subprime crisis which caused the collapse of Lehman Brothers has caused a significant stir in the financial industry. Many counterparties ended up with huge exposure and default due to the fall of Lehman Brothers. However, Euroclear was able to manage the crisis well after it activated its crisis management plan which has been developed before the crisis.

Similarly, terrorist’s attack on New York World Trade Center has not only caused major security issues but has also significantly affecting the financial industry. Bank of America and Deutsche Bank were the direct victims of the terrorist attack. Both banks remained sound operation and survived through the crisis due to well business continuity planning.

Besides, Hurricane Gustav that caused massive destructions in United States in 2008 has crippled the local banking system in Louisiana and Mississippi. BancorpSouth Bank quickly activated its business continuity plans shortly after the announcement of the hurricane. Various actions and measures were being taken systematically thanks to BancorpSouth’s sound planning in business continuity.

In 2010, Development Bank of Singapore (DBS)...