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The Honolulu Advertiser
Posted on: Tuesday, August 5, 2003

Many companies still unprepared for major terror strike

By Del Jones
USA Today

Nearly two years after the attacks of Sept. 11, executives say they are ill prepared for a terrorist attack or other disaster that would shut down the electronic lifeline from their companies to the world.

CEOs tend to think it's all but impossible to prepare for a worst-case scenario. In a Harris survey of 52 high-ranking executives of Fortune 1,000 companies, such as CEOs, chief operating officers and chief information officers, just 15 percent said they were prepared. The average grade executives assigned to their companies was a C+.

That could prove costly, even devastating. The typical large company would lose $400,000 an hour with systems down. That includes systems that coordinate the entire business from the time raw materials come in the door to the time customers pay, according to SunGard, which provides disaster recovery services. It estimates that a major disaster would last 35 hours. Even if it were 10 hours, as the CEOs predict, it would cost the typical big company $4 million.

A disaster doesn't have to knock down a skyscraper to have major effects, says Johan Eliasch, CEO of Head, a Netherlands-based maker of skis, tennis rackets and other sports equipment. A company's entire operations are run by information systems, Eliasch says. "If they do not run, activities come to a grinding halt."

Yet, the topic of a major communications disaster has never been discussed at the board meetings of one in five Fortune 1,000 companies, according to the Harris survey.

Retailer Overstock has taken steps that include backing up its electricity with a battery that would provide four hours of power to the computer system. That battery system is backed by a diesel generator buried off site with two weeks of fuel. It's watched over by armed guards, says CEO Patrick Byrne.

Complete backup tapes are trucked every morning to a cave carved 200 yards into a granite mountain 10 miles to the east of Overstock's Salt Lake City headquarters. Byrne says he still feels vulnerable to things he has not anticipated.

"There is no such thing as being totally prepared for a disaster," Byrne says.

Executives say they can't even get their arms around what has become predictable, such as cyberattacks by hackers.

"We get attacked maybe 20,000 times per month," says Chuck Jacobus, CEO of Cybernet Systems, a small robotics research company in Ann Arbor, Mich.

Such attacks have become so menacing that just 2 percent of large companies believe a terrorist attack is the biggest threat to information systems.

Large companies say they are more threatened by "the enemy within," such as disgruntled and former employees, says Mark McClain, president and founder of Waveset Technologies, an Austin, Texas, company that makes software to keep unauthorized people out of information systems.

Executives at one in three "Fortune 1,000 companies say their companies are no more prepared for a Sept. 11 event than they were two years ago; just 56 percent have arranged for backup offices, and only 60 percent say their company has a team designated to handle information continuity.