The report, entitled Influenza Pandemic: Key Securities Market Participants Are Making Progress, but Agencies Could Do More to Address Potential Internet, comes just days after President Obama declared a national emergency because of the spreading H1N1 flu and focuses on the financial services industry, though the impact could be broader to include a wide number of industries.
"Increased demand during a severe pandemic could exceed the capacities of Internet providers' access networks for residential users and interfere with teleworkers in the securities market and other sectors," the GAO study said, citing studies by the Department of Homeland Security, Internet service providers and its own analysis.
GAO, Congress' investigative arm, said ISPs have limited ability to prioritize traffic or take other actions that could assist critical teleworkers. The Congressional auditors said some actions, such as reducing customers' transmission speeds or blocking popular Web sites, could negatively impact e-commerce and require government authorization.
According to the GAO, DHS has failed to:
GAO pointed out that because key securities exchanges and clearing organizations mostly employ proprietary networks that bypass the public Internet, their ability to execute and process trades should not be affected by any congestion. And, these financial services organization have prepared pandemic plans that addressed key regulatory elements, including hygiene programs to minimize staff illness and continuing operations by spreading staff across geographic areas. However, GAO said, not all of these financial services companies had completed or documented analyses of whether they would have sufficient staff capable of carrying out critical activities if many of their employees were ill. Also, the report said, not all had developed alternatives to teleworking if congestion arises.
GAO said the staff of the Securities and Exchange Commission has regularly examined market organizations' readiness, but could further reduce risk of disruptions by ensuring that these organizations prepare complete staffing analyses and teleworking alternative.
GAO recommended and the SEC concurred that the SEC conduct better reviews of market participants' plans.
But DHS didn't concur with all of GAO's recommendations. Jerald Levine, DHS director of departmental GAO/Office of Inspector General Liaison Officer, wrote to the GAO that DHS will take steps to mitigate the impact of any pandemic-related congestion on the systems that the federal government uses to communicate critical national security/emergency preparedness information. However, he wrote, addressing Internet congestion for other communications, as a general matter, does not fall within DHS's responsibilities, and that DHS does not have the responsibility for developing an Internet congestion strategy separate and apart from assuring national security/emergency preparedness communications.
In response, GAO said a presidential directive, HSPD-7, gives DHS broader authority to safeguard key communications networks, and under that authority, should take the steps to relieve potential congestion during a pandemic.
A number of members of Congress prompted GAO to conduct its study as concerns grew that a more severe pandemic outbreak than this past year's H1N1 flu could cause large numbers of people to stay home, increasing their Internet use and overwhelm ISPs' network capacities. According to GAO, such network congestion could prevent staff from broker-dealers and other securities market participants from teleworking during a pandemic.