Singapore financial sector to get another 'epidemic' in 2008

Thousands of innocent bankers could "perish" in Singapore's next financial sector disaster exercise in third quarter-2008, when the Standing Committee on Business Continuity Management of Association of Banks in Singapore (ABS) is planning to simulate the late stages of an infectious disease epidemic on the island. The ABS' decision should come later this month.

No event in Singapore can be taken seriously until it has an acronym, so an exercise for the Lion City's entire financial sector is called an "industry-wide exercise", or IWE.

The ABS committee favors a multi-day IWE spread over two weeks. The United Kingdom ran a financial sector pandemic scenario, "Exercise Winter Willow", over three weeks from Jan. 30 to Feb. 20, 2007, and a similar exercise in the United States in September and October also lasted three weeks.

Members of the ABS committee, who represent big local and global financial institutions, participated in one or both of those exercises and have concluded that three weeks is too long--senior management tend to lose interest.

Committee members also remember the good, the bad and the ugly about Singapore's first IWE in May, 2006. Some 1,000 people participated, including head office honchos and a hundred observers from all over the world. Banks prepared and practised extensively in advance, which raised the resilience level of an industry sector that contributes 11 percent of Singapore's GDP and employs about 200,000 people.

But the scenario--a series of terrorist bombings around the financial district--was not credible and erratically executed, and the whole event was very expensive. No one in Singapore thinks anyone could plant five bombs in the financial district undetected by the nation's omnipresent security services.

Network transmission problems meant several participants couldn't receive the online scenario delivery, and they became frustrated at being out-of-synch with other participants. Flying consultants back-and-forth from the United Kingdom must have contributed to KPMG's eye-popping consulting fee of S$1.3 million (US$909,000) to put on the exercise. The government's Monetary Authority of Singapore (MAS) picked up half the tab, but every financial institution in town got a bill for its share of the fun. The major banks each got a bill for S$45,000 (US$31,469).

Costs are always an issue for famously frugal Singaporeans, but lack of funds is definitely not the government's problem: Singapore's Government Investment Corporation (GIC) just this week paid US$6.8 billion for 4 percent of Citibank, and last year paid US$9.75 billion for 9 percent of Europe's UBS.

The ABS BCM committee's first priority in 2008 will be to localize any disease scenario for a country with just 4 million people--but 400 licensed financial institutions and 200 insurance companies and brokers--on an island only 40km (26 miles) wide. With help from the MAS, the ABS will rope in the Ministry of Health, Singapore Civil Defence Force and other public-sector entities to add realism to the exercise.

The committee's second priority will be to save money by using local talent to run the event. The ABS is looking for a project manager to run the thing, supported by an entity or company that can act as the support staff. There is no shortage of competent, experienced BCM professionals in Singapore, but finding a firm with both the relevant experience and the resources to pull this off will be challenging.

A plausible scenario and professional execution at a reasonable price are prerequisites for any exercise. The key to making Singapore's 2008 IWE genuinely useful to the country and the participants, however, will be getting bank executives to feel viscerally, over a sustained period, the consequences of losing as many as half their employees and customers--temporarily or permanently, but simultaneously--to disease.

An intellectual challenge won't be enough; there's got to be at least the illusion of pain, enough pain to make any banker feverish.

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Nathaniel Forbes

Nathaniel Forbes is the director of Forbes Calamity Prevention, a Singapore-based consulting firm providing business continuity, crisis management and emergency response advice and training to multinational companies, with a focus on companies with offices in Asia. The firm is 10 years old. FCP's current and past clients include Singapore Exchange Ltd, OCBC Bank, AXA Insurance, The Gillette Company, Siemens and ABN Amro Bank. A former President of the Singapore Computer Society’s Business Continuity Group, Nathaniel passed the DRII’s Certified Business Continuity Planner (CBCP) examination in 1997. He has lived, traveled or worked in Asia since 1973.