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
The George Washington University Institute for Crisis, Disaster, and Risk Management
Contents
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Project overview
Research method
eCommerce system recovery overview at WTC
Technology for surviving
Future research tasks
The George Washington University Institute for Crisis, Disaster, and Risk Management
September 11, 2001
The George Washington University Institute for Crisis, Disaster, and Risk Management
September 11, 2001
• 19 terrorists hijacked 4 aircraft for suicide attacks
• Almost 3000 people killed
• In Manhattan: - 34.5 million ft2 office space lost
- $50-70 billion in insured losses
• Most of these direct economic losses were
incurred by the private sector
The George Washington University Institute for Crisis, Disaster, and Risk Management
Terrorist Groups are Targeting
U.S. and World Economy
“The 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.”
Ayman Al-Zawahiri, head of Al-Qaeda operational
planning
(6 October, 2002)
The George Washington University Institute for Crisis, Disaster, and Risk Management
Project overview
• National Science Foundation Funded the study:
Financial and Strategic impacts of the attacks on
large publicly held corporations.
• Project consists of three sections
– Section 1: Organizational strategies for coping with
extreme events
– Sections 2: System recovery from extreme events
– Section 3: Defining of a common body of knowledge
for executive level crisis managements of extreme
events
The George Washington University Institute for Crisis, Disaster, and Risk Management
Research method
• Select target companies out of 330 companies
in WTC
• Compare the financial performance for 18
months by using stock price.
• Conduct personal interviews and surveys to
CEOs, CIOs and other executive officers and
technical personnel
• Analyze data and compare the result of three
sections
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
The George Washington University Institute for Crisis, Disaster, and Risk Management
Results
• Company 30, Fast Recovery Example
The George Washington University Institute for Crisis, Disaster, and Risk Management
Results
Company 33, Non-Recovery Example
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
The George Washington University Institute for Crisis, Disaster, and Risk Management
Research method for the
section 2: system recovery
from extreme events
The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
• Merrill Lynch, one of the largest investment firm
– Number of employees lost : 3
– Amount of office space lost: 2,083,555
– Physical location affected: 4 World Financial Center,
Whole Building
– 2002 revenue: $28.5billion
– Headquarters: 4 World Financial Center, New York,
NY 10080
The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
• Merrill Lynch, one of the largest investment firm
– Returned back to work within 24hours
– Transferring trading operations to London, Tokyo
and Hong Kong
– Used their web site to communicate relocation and
emergency transportation information to employees
The George Washington University Institute for Crisis, Disaster, and Risk Management
Merrill Lynch stock performance
The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
• Citigroup
– Number of employees lost: 3
– Amount of office space lost : 7 WTC (7 WTC
was leased to Citicorp)
– 2002 net income before taxes: $ 20.537 billion
– Headquarters: Citigroup Inc. 399 Park
Avenue, New York, NY, 10043
The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
• Citigroup
– Returned back to work within 24 hours
– Transferred Series of computer and backup
data to another branches (as far as London)
– Obtain a spare office location for emergency
use
The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
• Marsh & McLennan Cos.
– Number of employees: 295 (mostly, IT staffs)
– Amount of office space lost: 600,000 sq.ft. (North
Tower, Floors 93-100 )
– 2002 revenue: $10.4 billion
– Headquarters: 1166 Avenue of the Americas, New
York City, NY
The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
• Marsh & McLennan Cos.
– Came back to work few days after the attack
– Using the international structure, the firm quickly
pulled lost data from other locations
– Relocated workers to New Jersey and
Pennsylvania within 7-10 days
The George Washington University Institute for Crisis, Disaster, and Risk Management
Marsh & McLennan stock
performance
The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
• NYBOT(New York Board Of Trade)
– Parent company of coffee, sugar and cocoa
exchange Inc.(CSCE) and the New York
Cotton Exchange (NYCE).
– Lost its primary trading facility in WTC
– Lost the main trading machines in WTC
The George Washington University Institute for Crisis, Disaster, and Risk Management
eCommerce system recovery
overview at WTC
• NYBOT(New York Board Of Trade)
– Returned back to the normal situation after 7 days
(Monday, Sept. 17th)
– Prepared the hot site with Comdisco (commercial
disaster recovery service bureau in 1993, $300,000
maintain cost/year)
– Adding 700 phone line and 20 T-1 to the hot site and
run the business.
The George Washington University Institute for Crisis, Disaster, and Risk Management
Critical Success Factors
• Preparedness
– Intensive preparation after the WTC
bombing in 1993
• NYBOT: started to build the hot site in 1995
• AON: prepared disaster recovery plan
– Y2K preparation
• Merrill Lynch: prepare the data center for
the computer malfunctions.
The George Washington University Institute for Crisis, Disaster, and Risk Management
Critical Success Factors
• Action
– Rapid decision making procedures
• Marsh and McLennan: rapidly decided the
office relocations and
– Knowledgeable technical staffs and vendor's
supports
• NYBOT: added the phone line and T-1 lines
within one day with vendor’s quick supports.
The George Washington University Institute for Crisis, Disaster, and Risk Management
Technology for surviving
• Mirroring (data shadowing)
– Merrill Lynch used this technology to protect
critical data as a part of their Y2K preparation
– Many e-commerce companies use this technique to
transfer the important data
– Version and IBM start to service the rerouting calls
service from a damaged office to another location
The George Washington University Institute for Crisis, Disaster, and Risk Management
Technology for surviving
• Clustering/zoning
– Isolation technique to prevent localized failure
impacting the entire storage system.
• Wireless technology
– NOBOT: distributed 200 cells to trader after the
attack
– After the attack, many companies consider wireless
network service options for reliable data
communications.
The George Washington University Institute for Crisis, Disaster, and Risk Management
Technology for surviving
• Data redundancy
– Successfully recovered companies had a redundancy
data (customer records, transactions records) in other
locations.
– Hot site and cold site is also part of redundancy
strategies.
– Doing regular data/log back up and save them to
multiple places are the key.
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
The George Washington University Institute for Crisis, Disaster, and Risk Management
How was
it used?
Framework for Analysis
of Strategic Impacts
How did
it work?
What was
in place?
What was
learned?
What was
improvised?
Revised Corporate Strategy
Investments in preparedness
What was
modified or
changed?
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
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