You know that business continuity (BC) plan that you keep meaning to write but put off for another day?

It’s time to stop procrastinating because some changes to business continuity are on the horizon. The SEC is proposing a new rule that would require SEC registered investment advisers to adopt and implement written business continuity plans to address operational and other risks related to a disruption in the investment adviser’s operations.

Achieving SEC Compliance Through Planning & Preparation

The SEC has recently recognized the need to implement and enforce BC rules as several financial advisory firms had difficulty rebounding after Hurricane Sandy in 2013. The goal of these changes is to ensure that clients are protected, not harmed, in the event of a business disruption. It’s not just about the client, however. Having a BC plan in place can help reduce the risk of a disruption affecting operations, and can greatly cut recovery time.

According to SEC chairwoman Mary Jo White, “while an adviser may not always be able to prevent significant disruptions to its operations, advance planning and preparation can help mitigate the effects of such disruptions and, in some cases, minimize the likelihood of their occurrences.”

Even though these SEC proposed rules might not be enforced immediately, your business will undoubtedly benefit from having a BC plan in place. Over 80% of businesses affected by a major incident either never re-open or close within 18 months. The ones that do survive usually do so because they planned their response to a disruption before it happened.

Business continuity plans should address the following issues:

  • Maintenance of critical operations and systems, as well as the protection, backup, and recovery of data
  • Alternate physical office locations
  • Communication plans for clients, employees, vendors, and regulators
  • Assessment of critical third-party vendors
  • Transition of business when the business is unable to continue providing services

However, just having plans in place in not enough. You’ll also need to review them annually and update all relevant documents to make sure they are adequate and effective.

Don’t feel overwhelmed. Business continuity can be a confusing topic, but it doesn’t have to be. Click here to watch “The ABCs of BCP: Navigating Your Business Continuity Program.” This webinar should answer any questions you might have about BC programs.

While you might not have any control over when an incident might occur or its magnitude, you do have control over how you plan for and handle the incident. Don’t be a part of the statistic. Make sure your BC plans are written out, up to date, and actionable. Not only will this greatly benefit your business and its future, you’ll be ready for when the SEC does decide to implement these changes.

The last thing you want to do is scramble to make plans at the last minute, or worse, not have any plans at all. Taking the extra time to carefully write out BC plans now will give you peace of mind in the future, and you will meet SEC requirements.

Need help with meeting the SEC’s current and proposed guidelines? Click here for more information about our Audit Ready Package for Asset Managers.

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