Lenders Urged to Pay Attention to Security Costs After Sept. 11.(Brief Article)

The need to have a disaster recovery plan in place has been highlighted by the events of Sept. 11, a day which saw entire offices, and the records they contained, destroyed after the World Trade Center towers collapsed following terrorist attacks. Two sorts of threats have emerged since then, according to Scott Evans, director of real estate advisory services, Ernst & Young.

Speaking at a panel session on disaster recovery/business contingency programs at the Mortgage Bankers Association's recent commercial and multifamily loan administration conference, Mr. Evans said that in addition to the physical threat of biological and chemical warfare, another threat is evidenced by people refusing to return to work near Ground Zero.

This has resulted in an increased need to evaluate the physical risks of property.

The International Facilities Management Association has reported that 90% of firms have assessed their firm's security measures since Sept. 11, Mr. Evans said, and the resulting changes to security are causing budget hikes due to equipment and staffing needs.

Then, there is the increased cost of insurance.

Corporate responses to Sept. 11 have been "all over the map," with some companies relocating out of New York City and others refusing to rent in high-profile buildings.

The bottomline, as Mr. Evans sees it, is that this is just the beginning of these trends.