Ernst & Young E-Business Risk Survey Finds Significant Number of Canadian Businesses Cannot Recover From a Computer Failure Fast Enough

Many lack effective recovery plan while most cite IT failure as significant risk

MONTREAL, Feb. 11 – According to a survey released today by
Ernst &Young LLP, many businesses admit that the time it would take them to restore
their systems and Web-based business processes is longer than they estimate their
businesses can function without them. In the survey of CEOs and CIOs of leading Canadian
companies, 65% of those who stated it was critical for business continuity that systems be
restored within 24 hours of a disruption admitted they could not do it. Overall, 36% of
the survey respondents could not achieve the recovery time they had identified as critical
to prevent a major business disruption.

The report, entitled “The Fabric of Risk,” points
out that while companies have embraced the Internet and are using it and other systems
technology to achieve efficiencies through such means as supply chain management and
Customer Relationship Management (CRM) tools, not all business leaders understand the new
kinds of risk that interconnectedness brings. “A particular company may be
justifiably confident in the security of its own systems,” said Bill Demers, Canadian
Leader for E-Business at Ernst &Young. “But business leaders need to understand
that the other organizations they are connected to – those that enable their business –
can also disable their business.”

Some of the other findings in The Fabric of Risk include:

  • 34 per cent of respondents identified computer system
    failure as the most significant risk to business continuity, ahead of other threats to
    business operations, such as recession, commodity prices and exchange rates, disasters
    (natural and man-made) and terrorism

  • 83 per cent believe the information stored and transmitted
    on their IT systems, via the Internet and on local networks is secure – 26 per cent do not
    have a business continuity plan; 25 per cent have no computer disaster recovery plan; 41
    per cent have no overall crisis management plan

Despite the numerous security breaches and business
disruptions reported in the last six months, CEOs and CIOs remain confident their systems
are secure and the likelihood of a major disruption is low. This has led to a large number
being unprepared to deal with an event should it occur. “Clearly, business leaders do
not think this can happen to them”, states Claude Bismuth, E-Business Solutions
Partner at Ernst & Young “But with the large and growing number of businesses
both dependent on the Web and connected to each other, the likelihood of an event is much
higher than they realize.” Bismuth hopes this study will alert Canadian business
leaders to the issues and encourage them to take steps to manage and plan for their risk.

Lack of planning may also put companies at risk from a
governance perspective, says Anthony Kramreither, a corporate law partner with Donahue
LLP. “Failing to take reasonable precautions to manage risks or problems when they
occur may have serious legal implications, not only for companies, but for their officers
and directors as well”, Kramreither says. “Having a contingency plan in place to
respond quickly to IT failures or other emerging risks or crises is particularly important
for public companies whose stock prices can be adversely affected by such crises and risks.”

The E&Y IT Risk study is based on interviews with 40
CEOs and 40 CIOs (or equivalent) from 80 of the 1000 largest publicly traded companies,
based on net profits, as compiled by Report on Business. The study, conducted on behalf of
E&Y by Goldfarb Consultants, yields data, which 19 times out of 20, are accurate to
within 10 percentage points of what they would have been had the entire population of 1000
been surveyed (confidence level of 95 per cent).


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