Backup systems save the data when disaster strikes
By Jenny C. McCune • Bankrate.com

One of the indelible images of the World Trade Center attack is the towers spewing clouds of smoke and debris. Among the rubble were thousands of pieces of paper from some of the world's largest financial institutions.

Do you need to worry if it was one of your account transactions floating 110 stories down? Probably not.

Although the financial complex was destroyed and many lives lost, most transactions processed through the New York offices of companies such as Morgan Stanley, Bank of America, and Credit Suisse First Boston remain secure.

Those firms enter clients' account activities into computer systems and then employ network backup and data protection systems. The information is duplicated and stored on computers in separate locations far from Lower Manhattan.

That includes everything from stock transactions to debits on banking accounts to account numbers. And the backup mechanism runs anywhere from daily to continuously.

Digital duplication already in place
"Bottom line is that all the information digitally stored on computers fell under the disaster-recovery plans that these firms had spent decades planning for and hoped they wouldn't have to put in place," says Charles Rutstein, a research director with Forrester Research in Cambridge, Mass.

"The only potential [for data loss] was with the incidental things," says Rutstein. "Things that might have been in paper and that hadn't been processed."

Although nobody has a firm number on how many companies employed such data safety efforts, Keith Gile, a senior industry analyst with Giga Information Systems, Norwalk, Conn., says "You could knock me over with a feather if less than 100 percent of the companies had some sort of back up and disaster recovery in place."

"Some were also in markets like Chicago, Atlanta, San Francisco, Los Angeles and Boston where they had buildings evacuated and need to find other places to work," says Comdisco spokesman Richard Maganini.

Available backup options
Services provided by Comdisco and its competitors range from storage of computer data to setting up work sites for employees.

Comdisco operates 45 disaster recovery centers worldwide, including 23 in North America. These sites are equipped with phones and computer systems where companies can move in the event a disaster forces them from their regular offices.

The financial companies, too, have backup systems in place. The most sophisticated systems actually "mirror" some or all of a company's computer operations.

For example, a company's transactions would be recorded not just by corporate computers at the World Trade Center, but also across the Hudson River in New Jersey where the company might have an additional data center. Backup centers can be even farther away, in places such as Iowa, Texas or Florida.

On Tuesday, according to one financial analyst, Morgan Stanley was able, despite the devastation to its New York offices, to successfully switch over to backup systems in the South in less than an hour.

Not the first backup experience
Most financial institutions also have had plenty of experience with backing up computer data. Fears about Y2K prompted many companies to overhaul and refine earlier data backup plans.

And companies that were tenants of the World Trade Center in 1993 when a terrorist truck bomb exploded already had a dress rehearsal for this week's disaster. After that attack, many companies beefed up their backup systems and disaster recovery procedures.

Although it varies from company to company as to what backup mechanisms were in place, most if not all had backed up -- duplicated and stored data off-site -- the night before the tragedy. That means all transactions up to that point would have gone through.

Reconstructing interrupted transactions
But no system is foolproof, and some financial dealings no doubt were lost.

That includes paper transactions mailed to the companies' New York offices but not processed before the buildings were hit. Transactions that arrived but were logged in early Sept. 11 also were probably lost, as were any "in transit" computer entries that were interrupted when towers were struck.

"Maybe a half to 1 percent of all transactions [at the World Trade Center] would have been interrupted," Giga's Gile estimates.

These transactions will have to be reconstructed by the affected companies and their clients. Because there won't be any "electronic trail" of these stock sales, deposits, or other financial move, information on backup systems won't be much of a help.

But Gile stresses this is a low percentage indeed.

Companies that were especially hard hit by terrorist attack are already reaching out, in spite of their employee casualties, to customers to reassure them that client data and assets are safe.

In a letter posted on the Morgan Stanley Web site, Chairman Philip Purcell seeks to reassure account holders:

"We want our clients to know today that in spite of the tragedies, all of our businesses are functioning and will continue to function ... All our clients should rest assured that their assets are safe and our financial advisers are hard at work contacting our individual investors to answer questions and address their concerns."

Lehman Brothers, whose offices in the nearby World Financial Center are inaccessible, has told clients via its Web site that business activities have been moved to alternate Lehman Brother locations and that the company "continues to serve our clients around the world."

"What's important is that financial institutions and brokerage houses set up communications lines with customers and they are in the process of doing that," Gile says.

Personal component can't be recovered
The biggest challenge to reconstructing customer information won't be in recovering data from earlier transactions. It will be the human loss of information that resided in the people who handled the information.

"That will be the hardest thing to replace," Forrester's Rutstein says.

Another data recovery hurdle: recovering information that was stored on individual employees' computers rather than a company network. This type of information is seldom backed up or, if it is, not on a regular basis.

"The most difficult thing is the human loss," agrees Comdisco's Maganini. "It's very tragic. But the fact that the buildings aren't there any more is also important.

"It's an enormous issue. Whenever we've had recovered companies before, they've had buildings to go back to. If a flood forces them out, water can be pumped out and the office fixed up," he notes. "But you can't do that in this case."

Indeed, the terrorist attack on the World Trade Center is taking financial institutions' disaster recovery plans where they were never designed -- or wanted -- to go.

Jenny C. McCune is a contributing editor based in Montana.

-- Posted: Sept. 14, 2001