For at least two mutual fund companies, disaster recovery plans saved the day when the two World Trade Center towers were destroyed two weeks ago. Both Fred Alger Management and OppenheimerFunds were up and running within hours after their investment offices were obliterated Sept. 11.

Foresight paid off for Fred Alger Management which occupied offices on the 93 floor of One World Trade Center. Despite the tragic death of the firm's president, David Alger, and 38 other members of the firm's investment staff, the company's full back office operations were switched over to the firm's Morristown, N.J., satellite office by the end of that day.

David had taken over the reins of the firm from his older brother and founder of the firm, Fred, in 1995, said Jim Connelly, executive VP of Alger. As the firm grew and assets flowed in, the younger brother determined that the firm needed more room and a more prestigious locale--one that carried more panache to showcase to Alger's international clients.

The firm had previously been headquartered at 75 Maiden Lane, just above a nail salon, quipped Connelly. The firm also maintained an operations center which is based in Jersey City, N.J., just across the river from the firm's former headquarters.

Planning for the Unthinkable

When David showed the intended new World Trade Center offices to his brother Fred, the elder Alger who still served as chairman of the board, was supportive of the office's move, but fearful that a bad storm or some type of terrorist attack could potentially impact both the downtown Manhattan and Jersey City locations. "If something happens at one site, it could affect the other site," Connelly recalls Fred Alger saying. He insisted that a third office be established at a more remote location, Connelly said.

As the firm prepared to move to its new World Trade Center headquarters in December of 1998, Alger was simultaneously readying its fourth floor office at the Morristown site which would support the firm's identical systems, said Connelly. "Every single system that ran from both firm locations is replicated here and were backed up every night," Connelly said. Those systems include the investment management and marketing functions of the firm. "We have a complete replica of our (Manhattan) trading floor," he said.

In addition, because Alger serves as its own transfer agent for all of its shareholders, the firm also has its own proprietary transfer agency system fully operational from the Morristown office, Connelly said.

Furthermore, unlike other mutual fund firms that look to outside companies to price their portfolio securities, Alger handles all of its own daily pricing; a complex system that had also been duplicated in Morristown, he added.

Ready and Waiting

The Morristown office is located about 35 miles west of the firm's former Manhattan headquarters, and was home to only a handful of marketing employees who had moved into the office last year. Besides housing those employees, the Morristown office consisted of empty but carefully assigned cubicles that were fully stocked, ready and waiting for employees to move in in the event of an emergency or crisis, Connelly said.

But Alger hadn't just set up a parallel operating location. "We did drills, department by department," Connelly said. Each employee in Manhattan and Jersey City was fully equipped with a package of information containing exact directions on how to get to the Morristown site by several different means of transportation, Connelly said.

That proved vital as many of the firm's New York employees had problems accessing their cars in the midst of the disaster aftermath. "When people got out here, everyone knew exactly what to do, sat down, logged in and started working," Connelly added.

History Teaches OppenheimerFunds

In 1993, after the first bombing attack at The World Trade Center, top executives at OppenheimerFunds realized that it was imperative to have emergency contingency plans in place, said Gregg Stitt, OppenheimerFunds' spokesman. OppenheimerFunds is a subsidiary of MassMutual Financial Group of Springfield, Mass.

While the fund firm's five million shareholder account records and shareholder servicing division had long been housed in OppenheimerFunds' Denver facility, the investment management and trading functions were handled from its offices on the 31st to 34th floors of Two World Trade Center.

The firm's business recovery plan went into high gear after all 598 employees had been evacuated from the building and the firm realized that the World Trade Center was forever gone, Stitt said. Anticipating that the stock market might reopen the following day, OppenheimerFunds relocated its downtown employees to a "suburban New Jersey" operating center, said Stitt, who declined to disclose exactly where the office was located.

Within seven hours of the firm's evacuation, all of OppenheimerFunds' portfolio managers and traders were back to work, Stitt added. He said that the firm is now seeking out a permanent location for its headquarters that is expected to be located somewhere in the New York metropolitan area.

Disasters of All Kinds

It needn't be a terrorist attack that sends a fund company into crisis mode.

In June of this year, AIM Management of Houston, Tex. found itself implementing its business recovery plan when Tropical Storm Allison stalled over Houston and dumped up to three feet of rain on the city. The storm flooded the 31-floor office building in which AIM has its offices, causing an outage in the building's phone and electrical services. AIM occupies more than half of the floors and maintains its portfolio management, fund administration and customer service units there, said Stephen Graddy, an AIM spokesman.

In the early hours of Saturday, June 9, AIM's manager of facilities was alerted that the building's concourse level which housed AIM's mail room, TV studio and archived fund accounting files, was under five feet of water, said Graddy. By mid-morning, AIM executives called for the execution of AIM's business recovery plan.

That plan called for several business units, including the firm's trading desk, and their personnel to relocate to AIM's call center, 160 miles away in Austin, Texas. The fully operational Austin site is capable of housing 150 employees on an as needed basis, Graddy said. Members of AIM's business recovery team made arrangements for employees to fly or drive to the facility and booked hotel rooms for them.

Those employees continued to work and the fund company's operations were continued, despite the firm's Houston headquarters being closed for two days, Graddy added. "We never lost any of our abilities or functions as a company. That's a big win."

Knowing the Drill

Can you ever be too prepared for a crisis? No, said Douglas Lashbrook, a certified disaster recovery planner and owner of Business Recovery Consultants in Hockessin, Del. "Most people are not prepared enough," he said.

According to Lashbrook, companies have to make certain assumptions in order to devise their emergency disaster plans. In most cases, companies logically expect to have key people available after the disaster has hit to help in the business recovery effort. But, as seen from the devastation at the World Trade Center, lives can be lost, which means survivors are left to do several jobs, Lashbrook said. "That can cause long-term problems for companies. You can't prepare for everything, but you can prepare for the worst-case scenario."

He suggests that it is vital to have employees document the methodology involved in their particular job. Although getting people to document how they do what they do can be like pulling teeth, this can prove critical if a crisis forces someone else to take over those tasks, he said.

Communication Called Critical

By far the most critical component of a disaster plan is knowing how to communicate with employees and key staff members after the crisis, said Lashbrook. You have to know how to get in touch with them by alternate phone numbers, cell phone numbers, or their relatives if necessary.

Moreover, just having a disaster contingency plan in place isn't adequate, Lashbrook said. "If you have a plan, but haven't tested it in six months, you don't have a plan."

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