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Firms strive to recover records after attack

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CIOL Bureau
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NEW YORK: In the panic that took hold after hijacked jets slammed into the

World Trade Center, Carol Larson remembered to grab her laptop before running

out of her office in the adjoining World Financial Center. It was a split-second

decision that ended up saving megabytes of critical data for the accountant's

customers after the badly damaged financial center was evacuated. But other

firms housed in and around the leveled World Trade Center were not as lucky as

Larson, a partner at accounting firm Deloitte & Touche.

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The attacks that tore through New York's financial district burned crucial

personnel records, leases, contracts and other paper documents, say analysts and

disaster recovery experts. Recent electronic data that had not yet been copied

also went up in smoke, they said. The disappearance of records could disrupt

business across the country for months to come, analysts say.

"It's going to be a herculean task to put a lot of this stuff

together," said Jack Barthell, a partner with auditing and consulting firm

PricewaterhouseCoopers. "The problem I think is compound here and that's

the loss of the people who knew what the records were, let alone where they

were."

Disaster recovery company Legato found that for the 18 companies it helped

get back on their feet, only about 70 percent of their data was backed up and

stored elsewhere, Legato Vice President Doug O'Shaughnessy said. Those that lost

records are trying to identify and replace them. "At the very least, people

are saying there are going to be huge delays," said Paul Bernard, who leads

an outplacement firm that bears his name. "Also it becomes a domino effect

... it's like General Motors not getting a part from another area." One

international bank, for example, worried about providing clients with cash and

delays in getting approval letters, said Bernard.

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In the worst-case scenario, a company may not know which customers owe money

to the firm and which vendors it owes money to, said Richard Oppenheim,

president of Denver-based SysTrust Services Corp., which provides information

technology assurance services. Some of the vendors might start charging interest

on the amount that is due, adding to woes of companies trying to dig their way

out of trouble, he said. "The world doesn't stop," Oppenheim said.

"But because you had such a slowdown, it'll take several months to

recover."

Companies are spending huge amounts of time hunting down copies of lost paper

records at government agencies, law firms and auditing firms, said Russ Gates, a

partner at accounting firm Andersen's risk consulting unit, which provides

disaster recovery services, among other things. Most important business records

are filed in more than one location. Even so, some records such as treasured

original articles of incorporation, that are akin to a birth certificate for a

firm, might never be recovered, said Barthell.

The World Trade Center attack has inspired many firms far from the area of

the attacks to take a fresh look at their records handling, O'Shaughnessy said.

Many firms are looking to beef up their disaster recovery plans, including

backing up data and applications and keeping junior employees abreast of major

issues.

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To be sure, most firms hurt by the attacks had much of their data backed up

and could retrieve key financial and customer-related records, analysts and

disaster recovery experts said. Copying important documents is typical in the

heavily regulated financial services industry.

CFO rolls up sleeves

But while most firms back up their data, it's normally done only every few

hours, or sometimes even days, experts said. Legato customers lost data that had

not been backed up for the last eight to 48 hours before the attacks,

O'Shaughnessy said. Moreover, the most recent data can be the most crucial. For

example, when the two hijacked airplanes rammed into the World Trade Center two

weeks ago, one of Legato's biggest customers - a financial services firm located

in a building across the street - had just four hours to remove about 20,000

tapes of data on securities trades, he said.

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Everyone, including the firm's chief financial officer, rolled up their

sleeves and pulled out the tapes instead of fleeing the area. "It was

information they couldn't have done without when the markets opened,"

O'Shaughnessy said. The stock market was closed for four days after the attacks,

partly to allow firms to recoup records and data.

Many of Legato's medium-to large-sized firms lost human resources records and

internal company records such as bills and departmental records that were not

backed up, he said. But the biggest risk yet for firms is paper records such as

purchase agreements, property leases, deeds and legal records that went up in

smoke, experts said.

"Original documents are always critical and therefore it's the most

sought after," especially in a dispute, Barthell said. Tragically,

companies also lost employees - which sometimes meant they were unable even to

know what records existed and the contents of those records.

One of Legato's customers, for example, recreated its information technology

environment but its workers weren't clear what to do with it once it was up and

running, said O'Shaughnessy. "It's left workers spinning in circles,"

he said. "Not only is it emotional draining, but it's definitely slowing

down the recovery."

(C) Reuters Limited 2001.

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