Mizuho IT Failure a Reminder on Business Continuity Preparedness

The beauty of effective business continuity capabilities is that they render the vulnerability of a given location irrelevant. That lesson was driven home in the financial world by the events of September 11, 2001, but the lesson seems not to have been learned by Tokyo-based Mizuho Financial Group. As a result of the Tohoku Earthquake, the firm has suffered disruption that may affect nearly $10 billion in transactions.

The bank says that both its ATMs and online banking capabilities will be out of commission until March 21. As we reported this morning:

Malfunctioning systems have already disrupted a total 500,000 settlements worth 650 billion yen in the past three days, causing delays in salary payments and preventing customers from withdrawing cash.

The system glitches coincide with an increased use of ATM and other services as consumers try to stock up on food and supplies, reflecting fears over radiation leaked from a quake-hit nuclear power plant.

"We are likely to see this kind of trouble again on March 25 and 31 when money transactions are expected to surge before the end of this fiscal year," said Barclays Capital analyst Shin Tamura.

"What they can do over this weekend would just be first-aid kind of stuff and that is not a complete solution," he said.

It's not clear whether Mizuho had appropriately designed business continuity capabilities and they didn't kick in for some reason or whether Japan's second largest bank simply didn't have a sound plan that included sufficiently remote failover sites.

Either way, Mizuho's current problems present a lesson to other financial institutions about the need for fool proof business continuity/disaster recovery capabilities, as well as another "black swan" example to alert risk managers of all sorts about the need for greater caution in modeling and planning for risk.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio