An exercise to simulate the effects of a flu pandemic by
financial firms in the City of London, has raised questions over
the ability of businesses to support large-scale home working as
employees stay away from the office to avoid
infection.
The exercise highlighted that financial firms could face
significant challenges if a greater proportion of staff work from
home, a report issued by the Financial Services Authority, the
Treasury and the Bank of England today reveals.
70 financial organisations and 3,500 individuals took part in
the exercise, the largest of its kind, which simulated the effects
of 22 weeks of pandemic on the banks and insurance companies in the
capital.
The exercise raised significant challenges for firms including
the need to ensure effective compliance and control when staff
worked from home, and the difficulties of maintaining IT security
and health and safety concerns.
The exercise also raised questions over the ability of telecoms
networks to support wide-scale working from home over a long
period, when staff shortages in the telecoms sector gradually
eroded their maintenance capability.
Absenteeism due to illness rose from 15% at the start of the
exercise to 49% at the height of the pandemic, with clusters of up
to 60% absenteeism in some business units.
Firms were forced to consider measures including repatriating
staff from overseas offices, introducing quarantine rules, and
offering bereavement counselling and help for staff who faced
financial difficulties.
Wholesale financial firms responded to the growing shortages of
staff by reducing trading volumes, and cutting back on other work
to concentrate on customer focused business.
The distribution of cash across the country emerged as an early
challenge during the exercise. High street banks were forced to
close an increasing number of branches and ATM machines became
unavailable.
Although some banks were able to extend the expiry dates on
credit and debit cards to work around postal delays, others were
unable to do so.
The scenario had less impact on insurance firms. However they
are expected to face a surge of claims, during a pandemic. Firms
considered a number of mechanisms for speeding up payment,
including making direct payments to customers credit and debit
cards.
The FSA, Treasury and the Bank of England are planning a series
of seminars and workshops early in the year to address questions
raised by the exercise. Discussions are also planned with overseas
financial regulators.
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