1. The George Washington University Institute for Crisis, Disaster, and Risk Management
The Survivals of eCommerce
Systems After the WTC Attacks
John R. Harrald, Ph.D.
Youn Hee Kim, M.S.
Institute for Crisis, Disaster, and Risk Management
The George Washington University
Supported by NSF Grant CMS 0219953
2. The George Washington University Institute for Crisis, Disaster, and Risk Management
Contents
โข Project overview
โข Research method
โข eCommerce system recovery overview at WTC
โข Technology for surviving
โข Future research tasks
3. The George Washington University Institute for Crisis, Disaster, and Risk Management
September 11, 2001
4. The George Washington University Institute for Crisis, Disaster, and Risk Management
September 11, 2001
โข 19 terrorists hijacked 4 aircraft for suicide attacks
โข Almost 3000 people killed
โข In Manhattan: - 34.5 million ft2 office space lost
- $50-70 billion in insured losses
โข Most of these direct economic losses were
incurred by the private sector
5. The George Washington University Institute for Crisis, Disaster, and Risk Management
Terrorist Groups are Targeting
U.S. and World Economy
โThe settlement of this overburdened account will
indeed be heavy. We will also aim to continue, by
permission of Allah, the destruction of the
American economy.โ
Ayman Al-Zawahiri, head of Al-Qaeda operational
planning
(6 October, 2002)
6. The George Washington University Institute for Crisis, Disaster, and Risk Management
Project overview
โข National Science Foundation Funded the study:
Financial and Strategic impacts of the attacks on
large publicly held corporations.
โข Project consists of three sections
โ Section 1: Organizational strategies for coping with
extreme events
โ Sections 2: System recovery from extreme events
โ Section 3: Defining of a common body of knowledge
for executive level crisis managements of extreme
events
7. The George Washington University Institute for Crisis, Disaster, and Risk Management
Research method
โข Select target companies out of 330 companies
in WTC
โข Compare the financial performance for 18
months by using stock price.
โข Conduct personal interviews and surveys to
CEOs, CIOs and other executive officers and
technical personnel
โข Analyze data and compare the result of three
sections
8. The George Washington University Institute for Crisis, Disaster, and Risk Management
Selection of Companies
GOAL: To sort through the thousands of companies
that had been directly affected by the attacks in order
to formulate a list of 20 and 25 companies to be studied
www.tenantwise.com
9. The George Washington University Institute for Crisis, Disaster, and Risk Management
Results
โข Company 30, Fast Recovery Example
10. The George Washington University Institute for Crisis, Disaster, and Risk Management
Results
Company 33, Non-Recovery Example
11. The George Washington University Institute for Crisis, Disaster, and Risk Management
Results
Ranked Average change in Stock price between 9/11/2001 & 3/11/2003
12. The George Washington University Institute for Crisis, Disaster, and Risk Management
Research method for the
section 2: system recovery
from extreme events
13. The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
โข Merrill Lynch, one of the largest investment firm
โ Number of employees lost : 3
โ Amount of office space lost: 2,083,555
โ Physical location affected: 4 World Financial
Center, Whole Building
โ 2002 revenue: $28.5billion
โ Headquarters: 4 World Financial Center, New
York, NY 10080
14. The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
โข Merrill Lynch, one of the largest investment firm
โ Returned back to work within 24hours
โ Transferring trading operations to London, Tokyo
and Hong Kong
โ Used their web site to communicate relocation and
emergency transportation information to employees
15. The George Washington University Institute for Crisis, Disaster, and Risk Management
Merrill Lynch stock performance
16. The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
โข Citigroup
โ Number of employees lost: 3
โ Amount of office space lost : 7 WTC (7 WTC
was leased to Citicorp)
โ 2002 net income before taxes: $ 20.537 billion
โ Headquarters: Citigroup Inc. 399 Park
Avenue, New York, NY, 10043
17. The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
โข Citigroup
โ Returned back to work within 24 hours
โ Transferred Series of computer and backup
data to another branches (as far as London)
โ Obtain a spare office location for emergency
use
18. The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
โข Marsh & McLennan Cos.
โ Number of employees: 295 (mostly, IT staffs)
โ Amount of office space lost: 600,000 sq.ft. (North
Tower, Floors 93-100 )
โ 2002 revenue: $10.4 billion
โ Headquarters: 1166 Avenue of the Americas, New
York City, NY
19. The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
โข Marsh & McLennan Cos.
โ Came back to work few days after the attack
โ Using the international structure, the firm quickly
pulled lost data from other locations
โ Relocated workers to New Jersey and
Pennsylvania within 7-10 days
20. The George Washington University Institute for Crisis, Disaster, and Risk Management
Marsh & McLennan stock
performance
21. The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
โข NYBOT(New York Board Of Trade)
โ Parent company of coffee, sugar and cocoa
exchange Inc.(CSCE) and the New York
Cotton Exchange (NYCE).
โ Lost its primary trading facility in WTC
โ Lost the main trading machines in WTC
22. The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
โข NYBOT(New York Board Of Trade)
โ Returned back to the normal situation after 7 days
(Monday, Sept. 17th)
โ Prepared the hot site with Comdisco (commercial
disaster recovery service bureau in 1993, $300,000
maintain cost/year)
โ Adding 700 phone line and 20 T-1 to the hot site and
run the business.
23. The George Washington University Institute for Crisis, Disaster, and Risk Management
Critical Success Factors
โข Preparedness
โ Intensive preparation after the WTC
bombing in 1993
โข NYBOT: started to build the hot site in 1995
โข AON: prepared disaster recovery plan
โ Y2K preparation
โข Merrill Lynch: prepare the data center for
the computer malfunctions.
24. The George Washington University Institute for Crisis, Disaster, and Risk Management
Critical Success Factors
โข Action
โ Rapid decision making procedures
โข Marsh and McLennan: rapidly decided the
office relocations and
โ Knowledgeable technical staffs and vendor's
supports
โข NYBOT: added the phone line and T-1 lines
within one day with vendorโs quick supports.
25. The George Washington University Institute for Crisis, Disaster, and Risk Management
Technology for surviving
โข Mirroring (data shadowing)
โ Merrill Lynch used this technology to protect
critical data as a part of their Y2K preparation
โ Many e-commerce companies use this technique to
transfer the important data
โ Version and IBM start to service the rerouting
calls service from a damaged office to another
location
26. The George Washington University Institute for Crisis, Disaster, and Risk Management
Technology for surviving
โข Clustering/zoning
โ Isolation technique to prevent localized failure
impacting the entire storage system.
โข Wireless technology
โ NOBOT: distributed 200 cells to trader after the
attack
โ After the attack, many companies consider wireless
network service options for reliable data
communications.
27. The George Washington University Institute for Crisis, Disaster, and Risk Management
Technology for surviving
โข Data redundancy
โ Successfully recovered companies had a redundancy
data (customer records, transactions records) in other
locations.
โ Hot site and cold site is also part of redundancy
strategies.
โ Doing regular data/log back up and save them to
multiple places are the key.
28. The George Washington University Institute for Crisis, Disaster, and Risk Management
Next Tasks
Determine what caused discrepancies
between the outliers, and confirm our
findings regarding market absorption of
financial loss,
Investigate strategic impact on corporations
not directly impacted by WTC attack and
compare with sample companies.
Interviews, surveys will investigate specific
eCommerce issues
29. The George Washington University Institute for Crisis, Disaster, and Risk Management
How was Framework for Analysis
it used? of Strategic Impacts
What was
How did What was
What was modified or
it work? learned?
in place? changed?
What was
improvised?
Revised Corporate Strategy
Investments in preparedness
30. The George Washington University Institute for Crisis, Disaster, and Risk Management
Expected Results
Unique evaluation of financial impacts of
WTC attacks on large corporations.
Evaluation of corporate preparedness, disaster
recovery and business continuity strategies
procedures, and technology.
Evaluation of survival techniques and
Technologies for eCommerce
Better understanding of impact of extreme events
events on corporate strategy, plans, & investment
31. The George Washington University Institute for Crisis, Disaster, and Risk Management
Questions?
For additional information contact John R. Harrald at
jharrald@gwu.edu
(202) 994-7153
www.gwu.edu/~icdrm