Roundup: Sept. 11 Serves as Disaster Recovery Wake-Up Call.(Brief Article)

Two months after terrorist attacks claimed nearly 5,000 lives, destroyed 13 million square feet of office space and severely damaged twice as much space, many people and businesses in New York City are still reeling from the events of Sept. 11.

Amazingly, though many small businesses that operated in or near the World Trade Center complex have been forced to close down, most of the financial companies operating in the Towers have regrouped and stayed in business, even some of the firms that suffered the greatest losses. They did so with a lot of grit and help from business partners in many cases.

But the tragedy underscores the need for servicers to have disaster recovery plans to ensure they can keep critical business information and transaction systems operating after a catastrophe, according to Standard & Poor's.

"These plans should be tested at least annually and include a clear identification of critical functions and timelines," S&P said.

In the aftermath of the attacks, S&P's servicer evaluation group contacted all ranked servicers to discuss with them their capabilities and plans. S&P said that both conforming and nonconforming lenders say they are proactively taking steps to manage the situation and have also offered mitigation to borrowers affected by the attacks.

Moreover, S&P noted that the servicers managing commercial mortgage-backed securities transactions that included World Trade Center and nearby loans plan to advance principal and interest payments as necessary. At this point, none of the servicers believe that insurers will fail to honor loss insurance, according to S&P. Most businesses in the complex had business interruption insurance.

HomeSide Affirmed, with Caveat