We promised to revisit COVID-19/pandemic specific risks for the near future given we know all current SEC exams are considering these risks. Our last communique covered some of the considerations of electronic communications in a COVID-19 world.
If there is a silver lining to be found in 2020 within our world of compliance, it is that we should have a clear picture of how our business continuity plans (BCPs) execute in practice. This year’s annual review should reflect any insights gained in the course of the year. Some questions to consider might include:
- How did you document implementation of the plan?
- Were there parts of the plan that did not work as expected?
- Have you documented material changes?
- How does management ensure adequate supervision of employees?
- How have you ensured coverage for dual authorization requests?
Until now, many BCPs have been geared for temporary interruptions – regional weather, utility issues and the like. Having transitioned to the longer-term conditions of a pandemic, BCPs should reflect updates to “business as usual”. In the pandemic environment, firms should be evaluating key roles. These are not just the “key person” roles of investment managers, but those of any person with specialized knowledge in any services provided to clients and may include client service platforms and operations managers.
Succession plans should be reviewed not only for the inevitable, but also for cases of long-term absence, due to illness or otherwise. The plans should ensure coverage for all key roles or, at this point, ensure the actions taken to ensure coverage are accurately described.
Remember that telling the regulators that all is operating as it should, without exception, is usually a red flag that you are not looking at your program close enough. You should be finding room for improvement throughout the year as you execute your compliance testing and subsequently making enhancements to your program.
If you would like assistance in reviewing your business continuity plans, we are here to help. You can reach out to us at info@seccc.com.
