On August 27, 2013, the SEC’s Office of Compliance Inspections and Examinations (OCIE) issued a Risk Alert on business continuity and disaster recovery planning for investment advisers after reviewing responses to the widespread market disruptions caused by Hurricane Sandy last October. Following the two-day closure of the equity and options markets, OCIE examined approximately 40 investment advisers to assess their preparedness for, and reaction to, the storm.

OCIE’s Risk Alert encourages investment advisers to review their business continuity plans to improve response and recovery time after significant large-scale events. The Risk Alert specifically identifies six areas that investment advisers may consider reviewing to strengthen their current plans:

(1) preparation for widespread disruption;

(2) planning for alternative locations;

(3) preparedness of key vendors;

(4) telecommunications services and technology;

(5) communication plans; and

(6) reviewing and testing.