The US government's watchdog agency has warned that the country's financial markets have not finished planning for a potential flu pandemic and recommended that federal banking and securities regulators set deadlines for completing the work.
The Government Accountability Office said in a newly released report that if securities exchanges "fail to produce fully robust plans before an outbreak -- which could begin at any time -- they may have insufficient time and resources to adequately prepare their staff and customers for changes in how the organisations will operate during a pandemic".
The report -- the third that the GAO has issued on the "security and resiliency" of US financial markets since the 11 September terrorist attacks -- is dated March but was just posted on the agency's web site.
As part of the report, the GAO looked at the pandemic plans of seven securities exchanges, markets, clearinghouses and payment processors that are deemed to be critical to the financial services industry. The report did not identify the organisations but said only one had completed its planning for a possible pandemic.
In a joint letter that was attached to the report, federal regulators disagreed with the GAO's call for pandemic planning deadlines. The regulators said that planning efforts are in progress at all of the key financial market organisations and are being reviewed by the government on an ongoing basis.
"If we find organisations' efforts lagging, we will consider taking additional actions, including those you recommended," the regulators wrote in the joint letter, which was signed by officials at the Office of the Comptroller of the Currency, the Federal Reserve System and the Securities and Exchange Commission.
But the GAO, in a response to the comments of the regulators, held firm on its recommendation. Indeed, the GAO throughout the new report called on federal regulators to outline specific actions and deadlines for financial markets to meet.
"Without such official expectations, market participants may not adequately prepare plans that are sufficiently robust to address the more serious scenarios, which could include widespread illnesses, deaths, transportation bans or telecommunications bottlenecks," GAO officials wrote. They also said that setting a date for completing the pandemic plans "would increase the likelihood that organisations fully prepare and have adequate time to test and adjust any planned responses".
Another issue that was brought up in the report is a pandemic's potential impact on communications capabilities, especially if large numbers of employees are forced to work from home. Some people involved in pandemic planning have warned that telecommunications networks may not be able to handle the increased load, and the GAO agreed that the ability of networks to support such a large increase in remote access is a question mark.
"It is not known whether the lines and switches serving individual neighbourhoods or areas would have sufficient capacity, particularly since more people overall may be home during a pandemic, as a result of school or workplace closings," GAO officials wrote.
Thus far, the SEC and other financial regulators have issued general statements about a possible pandemic that advise development of business continuity plans but do not tell financial markets when those plans should be completed.