BCP Spending to Plateau
Although spending on business-continuity planning (BCP) in the securities industry rose considerably from 2001 to 2003, reaching $2.5 billion, a 57 percent increase, spending is expected to rise only marginally in 2005 and then decline in 2006, according to a recent TowerGroup report.
The study states that "assuming threats to the global financial system do not significantly escalate" between now and 2006, the expectation is that BCP spending will increase by 1.4 percent over 2004-2005 and will then decline by 1.3 percent in 2006.
Why the decline? The industry has already made the bulk of its BCP investments and can now leverage the economies of scale.
Senior Analyst Dushyant Shahrawat points out in the report that "BCP has evolved from an IT-centric, technology-intensive function focused on getting the application back up to a more comprehensive process of ensuring business functions and departments are restored during a disruption or getting the entire business process back up."
Since 9/11, some financial-services firms have created central departments that house the BCP responsibility. TowerGroup believes that the best approach is to create centralized guidelines that map to industry benchmarks - and then decentralize BCP efforts to ensure that they are worked into each business unit's decision making.
2001-2003 $2.5 billion - 57% increase or $895 million
2004-2005 1.4% increase
2005-2006 1.3% decline