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Recent Run-Through Helps Merrill Deal With Disaster

Having just conducted a major disaster-recovery exercise in May, most Merrill Lynch employees knew what to do on Sept. 11.

Four months ago, Merrill Lynch carried out an extensive, two-day disaster-management exercise that detailed the duties of almost every employee on the firm's payroll, from senior management to new hires. On Sept.11, the firm's World Financial Center headquarters, just .2 of a mile from the World Trade Center, was rocked by the after effects of a terrorist attack that brought two of New York's most recognizable buildings to the ground. Over 9,000 employees of the $1.6 trillion international-financial institution had to flee their offices.

"We had distributed data centers in there, desktops ... the whole kit and caboodle," says Merrill Lynch Director of Global Contingency Planning, Paul Honey.

Merrill's disaster-recovery plan was a blueprint of command centers and telephone bridges, featuring preprinted wallet cards with critical phone numbers and employee responsibilities. The recovery exercise in May assumed the occurrence of an event "of equal, if not greater, impact than the events of Sept.11."

To continue functioning after such an event, business lines were prioritized, in terms of which to revive first in the event some were temporarily downed. "We had predesignated logistic-team members that were responsible for transportation, accommodations, food, etc.--really the nuts andbolts of recovery planning," says Honey.

After prioritizing the importance of different business lines, (Honey would not list them) the firm, he says, "qualified" all of its critical applications, ensuring an adequate amount of technology existed to restore those applications in the event of a disaster.

A three-step process was also developed, the first of which was to ascertain the whereabouts and well being of the firm's employees. The second required disaster-recovery leaders to collect information on the damage to the firm's facilities and technology and the third, based on that information, called for Merrill executives and contingency specialists to chose an appropriate response strategy from a list of options. The firm's contingency plans were devised to handle an eight-week absence from its main facility, the cause of which had taken place at the most inopportune time of the business day.

Honey says that within minutes of the attack, Merrill had its command center operational at one of the firm's other Manhattan locations. Getting there, however, wasn't easy. "From where I stood on the street it was chaos, people were running everywhere," he says.

Once the firm was able to settle into its back-up site, the challenge was to figure out each transaction's position when business stopped. Though the equity markets were closed for the remainder of the week, recalls Honey, Merrill's operations staff settled trades Tuesday night.

The firm did not suffer as much as some did from the disaster, he says, because it had established redundant telecommunications capabilities, not merely relying on Verizon, which suffered severe damage and could not maintain service for tens of thousands of customers.

Merrill still does not have access to its sight in downtown Manhattan and Honey says he is not sure when employees will be allowed back or how they will cope with being so close to ground zero when they get there. Therefore, he says, Merrill is offering its employees counseling from experts who helped survivors of the Oklahoma City bombing.

Moving forward, Honey says he and his staff need more time to determine the real lessons learned from coping with the disaster. "We say that (disaster recovery) is a process not a project. Right now we will go through and figure out what we did well, what we didn't do so well and make sure we are better prepared for the next event."

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