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Terrorists Target Financial Firms

Insurers jump to readiness, but are prepared for business as usual.

Last month's terrorism security alert that cited specific threats directed at financial centers was an acute reminder of the potential danger faced by financial services firms. Prudential Financial's ($474 billion in assets under management) Newark, N.J., headquarters and the Citigroup (2003 revenues of $77.4 billion) Center in New York City were among the facilities reportedly named as targets in computer files intercepted from terrorist operatives. Though the information later was described as pre-dating the attacks of Sept. 11, 2001, the alert resulted in a show of preparedness by company and government officials.

Shows of Solidarity

Though he acknowledged "a sense of shock" over the threat, Prudential chairman Art Ryan appeared outside the Prudential building in Newark on Monday, Aug. 2, with outgoing New Jersey Governor Jim McGreevey. In a briefing the following day at the Citigroup Center in midtown Manhattan, Homeland Security Secretary Tom Ridge, flanked by New York Governor George Pataki, New York City Mayor Michael Bloomberg and police commissioner Ray Kelly, said security measures had been in effect since Sept. 11, 2001, to ensure that the nation's financial system would not be disrupted by a terror attack. Such measures include tight communications between law enforcement authorities and financial institutions, a heightened awareness of the need for business continuity planning and "numerous drills and exercises to test backup systems," he said.

After meeting with executives from financial institutions in the New York area, Ridge credited them with fostering greater communications among themselves and a willingness to share their data facilities and other assets should an attack occur. Ridge said that one executive told him, "As soon as we get information, we're going to get on a conference call within hours and begin to figure out ways to support one another based on the kind of information you give us."

As gun-toting officers patrolled outside, Ridge praised Citigroup employees watching from a balcony for coming to work that day despite the threat. "Terrorists wish to make Americans who live in freedom live in fear. Just by showing up for work, you have made a powerful statement that they would not succeed," he said.

Had terrorists succeeded in attacking any of the locations, the human toll would have been incalculable. Newark, CA -based RMS, however, estimates the economic impact of such attacks would be between $500 million and $5 billion each. "When these targets were identified by the Department of Homeland Security, we anticipated a need among our clients and within the industry to analyze the risk for these targets," says Peter Ulrich, head of terrorism risk modeling, RMS. "The targets themselves and the suggested attack modes were already precompiled within our model. RMS issued information to our insurance clients guiding them on how to estimate their own risk in the vicinity of these targets."

Whatever Prudential's plans for coping with an attack's potential economic impact, the firm says it has beefed up its business continuity and disaster recovery capabilities in the wake of 9/11. Prudential spokesperson Leigh Manganaro comments that, "Like a lot of other companies, Prudential has enhanced it's business continuation plan after 9/11, and we are constantly reviewing it. Our business continuation plan is designed to give us the ability to operate as business-as-usual in the event of several contingencies."

This article includes content written by Steve Marlin that originally appeared in InformationWeek, a sibling publication of Insurance & Technology.

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

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