Influenza Pandemic:

Key Securities Market Participants Are Making Progress, but Agencies Could Do More to Address Potential Internet Congestion and Encourage Readiness

GAO-10-8: Published: Oct 26, 2009. Publicly Released: Oct 26, 2009.

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Concerns exist that a more severe pandemic outbreak than 2009's could cause large numbers of people staying home to increase their Internet use and overwhelm Internet providers' network capacities. Such network congestion could prevent staff from broker-dealers and other securities market participants from teleworking during a pandemic. The Department of Homeland Security (DHS) is responsible for ensuring that critical telecommunications infrastructure is protected. GAO was asked to examine a pandemic's impact on Internet congestion and what actions can be and are being taken to address it, the adequacy of securities market organizations' pandemic plans, and the Securities and Exchange Commission's (SEC) oversight of these efforts. GAO reviewed relevant studies, regulatory guidance and examinations, interviewed telecommunications providers and financial market participants, and analyzed pandemic plans for seven critical market organizations.

Increased demand during a severe pandemic could exceed the capacities of Internet providers' access networks for residential users and interfere with teleworkers in the securities market and other sectors, according to a DHS study and providers. Private Internet providers have limited ability to prioritize traffic or take other actions that could assist critical teleworkers. Some actions, such as reducing customers' transmission speeds or blocking popular Web sites, could negatively impact e-commerce and require government authorization. However, DHS has not developed a strategy to address potential Internet congestion or worked with federal partners to ensure that sufficient authorities to act exist. It also has not assessed the feasibility of conducting a campaign to obtain public cooperation to reduce nonessential Internet use to relieve congestion. DHS also has not begun coordinating with other federal and private sector entities to assess other actions that could be taken or determine what authorities may be needed to act. Because the key securities exchanges and clearing organizations generally use proprietary networks that bypass the public Internet, their ability to execute and process trades should not be affected by any congestion. In analyzing seven critical market organizations, GAO found they had prepared pandemic plans that addressed key regulatory elements, including hygiene programs to minimize staff illness and continuing operations by spreading staff across geographic areas. However, not all had completed or documented analyses of whether they would have sufficient staff capable of carrying out critical activities if many of their employees were ill. Also, not all had developed alternatives to teleworking if congestion arises. SEC staff have been regularly examining market organizations' readiness, but could further reduce risk of disruptions by ensuring that these organizations prepare complete staffing analyses and teleworking alternatives.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To better ensure that securities market participants as well as organizations in other critical sectors of the economy will continue to have access to the Internet during a pandemic, the Secretary of Homeland Security should assess the effectiveness and feasibility, and undertake if warranted, a public education campaign to reduce such congestion.

    Agency Affected: Department of Homeland Security

    Status: Open

    Comments: According to its 60 day letter to Congress, DHS's Assistant Secretary for Legislative Affairs noted that, while DHS agrees that raising the public's awareness of the importance of minimizing Internet usage during times of congestion is vital to an overall effective pandemic response strategy, DHS views its responsibility as limited to raising awareness only for its National Security/Emergency Preparedness (NS/EP) programs, such as the Government Emergency Telecommunications Service, and the Telecommunications Service Priority program. These services are made available to emergency first responders, key government officials (Federal, State, and local), and others to ensure NS/EP communications in times of emergency. The letter states that a public education campaign to address Internet congestion would fall outside of NS/EP communication mission; therefore, the Department does not have separate NS/EP initiatives under way to address this recommendation. The Department believes that further action falls within the mission scope of other agencies.

    Recommendation: To better ensure that securities market participants as well as organizations in other critical sectors of the economy will continue to have access to the Internet during a pandemic, the Secretary of Homeland Security should work with other federal partners to determine if sufficient authority exists for one or more relevant agencies to take any contemplated actions to address Internet congestion.

    Agency Affected: Department of Homeland Security

    Status: Open

    Comments: In its 60 day letter to Congress, DHS's Assistant Secretary for Legislative Affairs stated that DHS will continue to ensure that all proposed programs or activities are within the scope of its own authorities or our Federal partners' authorities. As part of its planning process, the Department continually assesses whether contemplated actions are within the scope of existing authorities or whether new authority is needed. When programs involve the participation of other entities, including other Federal departments and agencies, the Department coordinates closely with those entities to ensure there is a common understanding of the relevant supporting authorities.

    Recommendation: To better ensure that securities market participants as well as organizations in other critical sectors of the economy will continue to have access to the Internet during a pandemic, the Secretary of Homeland Security should coordinate with other relevant federal and private sector entities about actions that could potentially reduce Internet congestion.

    Agency Affected: Department of Homeland Security

    Status: Open

    Comments: In its 60 day letter to Congress, DHS's Assistant Secretary for Legislative Affairs discussed several initiatives DHS has undergone in partnership with Federal and private sector partners. For example, the Office of the Manager of the National Communications System (DHS component) worked in collaboration with Federal and private sector representatives of the telecommunications and IT sectors to produce a 2007 study titled "Pandemic Influenza Impact on Communications Networks." The letter also discusses the National Coordinating Council's (DHS component) ongoing coordination activities with various private sector telecommunication companies to coordinate the initiation, restoration, and reconstitution of Federal Government National Security/Emergency Preparedness (NS/EP) telecommunications services. Finally, through the National Infrastructure Protection Plan framework, CS&C (DHS component) coordinates regularly with relevant Federal and public sector entities represented on several sector coordinating councils, including the Information Technology Sector Coordinating Council, Communications Sector Coordinating Council, and the IT Government Coordinating Council. The coordinating councils review subjects pertaining to NS/EP, as determined by the respective groups. However, according to the letter, beyond these activities, with the public and private sector entities with regard to NS/EP communications, DHS does not have separate NS/EP initiatives underway specifically to address our recommendation-that DHS coordinate with other relevant federal and private sector entities about actions that could potentially reduce Internet congestion. DHS believes that further action to address Internet congestion generally (beyond NE/EP communications) falls within the mission scope of other agencies.

    Recommendation: To better ensure that securities market participants as well as organizations in other critical sectors of the economy will continue to have access to the Internet during a pandemic, the Secretary of Homeland Security should develop a strategy outlining actions that could be taken to address potential Internet congestion.

    Agency Affected: Department of Homeland Security

    Status: Open

    Comments: In its 60 day letter to Congress, the Office of Cybersecurity and Communications (CS&C), within the Department of Homeland Security's (DHS) National Protection and Programs Directorate, agreed with importance of developing a strategy outlining actions that could be taken to address potential impacts to National Security and Emergency Protection (NS/EP) communications due to Internet congestion during a pandemic. The letter goes on to discuss several efforts CS&C has undertaken, in the context of its NS/EP mission, to maintain activities intended to assess and address service interruptions, including congestion, whatever the cause. However, the letter also states that DHS believes that further action to address potential congestion outside of NS/EP communications falls within the mission scope of other agencies. Furthermore, DHS does not currently plan to undertake a specific initiative to develop a strategy to address potential Internet congestion in the event of a pandemic, but will instead continue to enhance its existing initiatives regarding provision of NS/EP communications in the event of congestion.

    Recommendation: To better ensure that important securities market participants are making adequate preparations for pandemic, the Chairman, SEC, should ensure that SEC staff take steps to ensure that critical financial market organizations are fully documenting the adequacy of their staffing levels to withstand high absenteeism and have formally developed alternative strategies in the event that congestion limits teleworking effectiveness.

    Agency Affected: United States Securities and Exchange Commission

    Status: Closed - Implemented

    Comments: In response to this recommendation, in November 2009 the Co-Acting Director of SEC's Trading and Markets Division sent letters to the critical organizations included in our review (as well as all related securities market organizations under SEC's purview) asking them to review their cross-training programs for critical operations to ensure that the plans fully reflect current staffing and operational needs during a pandemic. The SEC notes that the potentially high absenteeism that a severe pandemic could cause, including the potential impairment of critical personnel who normally manage to support essential functions in a crisis, gives securities organizations no choice but to ensure that their cross-training plans for critical operations are robust and current. The Acting Director's letter also urges the organizations to more fully document their plans to maintain critical operations if Internet congestion impairs their ability to rely on telework for support functions. These response measures could encompass a variety of approaches. For example, organizations might address situations in which Internet congestion impairs emergency work-at-home arrangements by planning to bring some previously dispersed essential personnel back to worksites while taking appropriate measures to ensure that this does not compromise their health and safety. Whatever approach is chosen, SEC's letter noted that these plans need to be carefully documented and tested to ensure their efficacy. The Acting Director states that Commission staff will incorporate reviews of the implementation of these recommendations in their future examinations of the exchanges and other key market organizations.

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