The terrorist attack on the World Trade Center on September 11, 2001 was the greatest operational risk crisis in financial history, according to Jeff Ingber, author of Resurrecting the Street: How U.S. Markets Prevailed After 9/11. On that devastating day, Ingber worked as general counsel for the Government Securities Clearing Corporation, located several blocks from the World Trade Center in lower Manhattan. He is now a managing director, Policy Compliance and Control, Citigroup.
In addition to the human toll (three out of four killed in lower Manhattan worked in the financial services industry), 9/11 represented an enormous disruption in the financial markets. Buildings, communication lines, transportation, and utilities were disrupted or destroyed, and electronic and paper records were irretrievably lost. The priority became to reopen the markets as quickly as possible to show Al Qaeda and the world that the United States had the capacity and the will to rebound from the attacks.
Ingber’s book tells the story of the immediate aftermath of 9/11 as regulators, traders, and other financial services workers, some fierce competitors, worked together to reopen the markets and rebuild the system. For the audience at RMA’s GCOR VI conference, Ingber took a longer view.
The terrorist attacks had a revolutionary impact on operational risk concerns such as disaster recovery and contingency planning. Back-up sites were moved, updated, and expanded after many proved inadequate on 9/11. Operational risk as a separate discipline became more prominent in the financial services industry.
Because of these changes and technological innovations such as cloud computing, a 9/11-type attack will never again have the same massive impact on the financial services industry, Ingber said. The next war will be fought on the cyberterrorism front, he added, with hostile nations, terrorists, and “hacktivists” willing and, in some cases, able to disrupt the financial services industry and other industries. Measures such as the cybersecurity legislation now being considered in Congress are intended to address these concerns.