No one wants to think about their IT systems going down. It’s the kind of thing you hope you never have to deal with. But the reality is that unexpected system failures do happen, and they can throw a major wrench into your operations, impacting everything from client service to your bottom line.
For registered investment advisory (RIA) and financial advisory firms, where trust and timely execution are paramount, these disruptions can be particularly damaging. So, the question isn’t if a failure will occur, but when — and more importantly, how prepared you are.
Let’s take a look at the essential strategies for ensuring business continuity during IT system failures. Because when it comes to protecting your business and your clients, being proactive is always better than being reactive.
Understanding the risks of IT system failures
To effectively prepare for sudden IT troubles, it’s important to first understand the risks and consequences your firm could face.
Loss of client data
Without robust protection, client information is vulnerable to loss during outages, hardware failures, or cyberattacks. Recovering this data, if even possible, can be time-consuming and expensive.
Regulatory compliance issues
RIAs and financial advisors are heavily regulated, and an extended period of inaccessibility to critical systems can have an impact on your IT compliance.
Damaged reputation
Clients expect reliability and seamless service. Downtime caused by system failures can erode trust, and regaining client goodwill could take plenty of time and effort.
Operational interruptions
Outdated IT and system failures can halt day-to-day operations, delaying transactions and creating inefficiencies that disrupt your entire firm.
Given these risks, it’s crucial to ask yourself this question: could your firm survive a major IT failure? If the answer is unclear, it’s time to establish a strong strategy to safeguard your operations.
Why backup systems are nonnegotiable
A reliable backup solution is the foundation of any business continuity plan. Think of it as your safety net in case of sudden data loss or corruption. Some key features of a strong backup system include:
Redundancy across locations
Store backups across multiple secure locations — both cloud-based and on-premises — to reduce the risk of data loss in case one storage location becomes compromised.
Regular automated backups
A manual backup process introduces room for error. Instead, opt for automated backups that capture your data at regular intervals so it is always current.
Encrypted data protection
Ensure all backups are encrypted to prevent unauthorized access, especially if sensitive client information is involved.
A backup solution isn’t just good IT hygiene — it’s an investment in business continuity that serves as the baseline for everything else discussed below.
Crafting a disaster recovery plan that works
A disaster recovery plan goes beyond data backups; it involves a structured procedure to regain access to your IT systems and resume business operations as quickly as possible. It is essentially your playbook to return to “business as usual.” The following are the core components of an effective disaster recovery plan:
Risk assessment
Identify the critical IT components your firm relies on and assess the risks to these systems (e.g., hacking attacks, natural disasters, or hardware issues) to prioritize and protect them effectively.
RTOs (recovery time objectives)
Establish a timeline for how quickly certain functions must be back online post-failure. For example, can your firm operate without email for a day, or must it be restored immediately?
RPOs (recovery point objectives)
Determine how much data loss your business can tolerate. This will dictate the frequency of your backups and how quickly you must restore them after a failure.
Testing and drills
A recovery plan isn’t something that you can set and then forget. Regular testing and simulations ensure your protocols work and your team knows how to execute them.
Dedicated points of contact
Appoint team members responsible for different recovery tasks. This ensures accountability and avoids confusion during a crisis.
Proactive business continuity strategies
While backups and disaster recovery plans ensure your firm can bounce back, proactive measures can help reduce the risk of disruptions in the first place. Consider these strategies for continuous resilience:
Invest in system monitoring and maintenance
Proactive IT monitoring ensures potential issues, whether software bugs, hardware failures, or attempted breaches, are identified early. Partnering with a managed IT services provider like RIA WorkSpace can streamline this process and help prevent system downtime before it occurs.
Use cloud-based solutions
Cloud-based platforms and applications can provide built-in redundancies and failover options, reducing the chance of a single point of failure. Your team can access critical business data and tools even in the event of a local disaster or outage.
Create trusted vendor partnerships
Build relationships with reliable IT vendors that specialize in supporting RIAs and financial advisors. Having experts on hand ensures your firm isn’t scrambling for external support during a crisis.
Provide employee training
Your staff should understand your continuity protocols. Train them regularly and ensure clear role assignments so each team member knows how to respond during IT emergencies.
Prepare your RIA firm for any unexpected IT event
Avoiding IT disruptions entirely might be impossible, but ensuring you’re prepared for them is not. By implementing reliable backup systems, crafting comprehensive disaster recovery plans, and adopting proactive business continuity strategies, your RIA or financial advisory firm can maintain client trust, even during the unexpected.
Unsure where to begin? RIA WorkSpace specializes in supporting RIAs with tailored IT solutions. Whether you’re building a robust recovery strategy or looking to enhance your current system, we’re here to help.
Schedule a consultation with our team today, and take the first step toward secure, uninterrupted operations.