Financial firms in the City of London are to take part in an exercise in November to simulate the impact of a flu pandemic on their financial systems.
Confirmation of the plan came as the Treasury, Bank of England, and the Financial Services Authority released the results of a major business continuity exercise in the City last November.
The exercise used a series of simulated terrorist attacks to test the response of 70 organisations and 3,000 participants to a major disaster. Although it showed the City was well prepared, it highlighted the need for firms to think more carefully about the business continuity of their supply chains, a report from KPMG revealed.
"A major bank would be in communication with its own team and own organisation. There was also a fair amount of communication with the regulators. But there was very little communication between the banks," said Rich Cudworth, KPMG's business continuity/disaster recovery partner.
The exercise showed that firms need to plan ahead more effectively during a disaster, rather than simply reacting to events.
"Many organisations focused on the immediate actions, and did not look ahead over the next two or three hours or the next working day," said Cudworth. "Questions were not being asked. Would cordons be in place the next day? Would the market be functioning normally?"
Firms also tended to underestimate the scale of the response by civil authorities to a disaster. They were surprised by the scale of police cordons and the extent of evacuation procedures.
Many business continuity plans underestimate how long it takes police to give information to casualties, said Cudworth. "This can lead to false expectations in dealing with distressed relatives. It may be seven or eight hours before information is available."
The exercise largely proved the effectiveness of organisations' business continuity plans, KPMG concluded. Some 86% of firms said the objectives of the exercise were met or exceeded.