Concerns exist that a more severe pandemic outbreak than 2009's could cause large numbers of people staying home to increase their Internet use and overwhelm Internet providers' network capacities. Such network congestion could prevent staff from broker-dealers and other securities market participants from teleworking during a pandemic. The Department of Homeland Security (DHS) is responsible for ensuring that critical telecommunications infrastructure is protected. GAO was asked to examine a pandemic's impact on Internet congestion and what actions can be and are being taken to address it, the adequacy of securities market organizations' pandemic plans, and the Securities and Exchange Commission's (SEC) oversight of these efforts. GAO reviewed relevant studies, regulatory guidance and examinations, interviewed telecommunications providers and financial market participants, and analyzed pandemic plans for seven critical market organizations.
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, according to a DHS study and providers. Private Internet providers have limited ability to prioritize traffic or take other actions that could assist critical teleworkers. Some actions, such as reducing customers' transmission speeds or blocking popular Web sites, could negatively impact e-commerce and require government authorization. However, DHS has not developed a strategy to address potential Internet congestion or worked with federal partners to ensure that sufficient authorities to act exist. It also has not assessed the feasibility of conducting a campaign to obtain public cooperation to reduce nonessential Internet use to relieve congestion. DHS also has not begun coordinating with other federal and private sector entities to assess other actions that could be taken or determine what authorities may be needed to act. Because the key securities exchanges and clearing organizations generally use proprietary networks that bypass the public Internet, their ability to execute and process trades should not be affected by any congestion. In analyzing seven critical market organizations, GAO found they had 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, not all 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, not all had developed alternatives to teleworking if congestion arises. SEC staff have been regularly examining market organizations' readiness, but could further reduce risk of disruptions by ensuring that these organizations prepare complete staffing analyses and teleworking alternatives.
Recommendations for Executive Action
|Department of Homeland Security||1. To better ensure that securities market participants as well as organizations in other critical sectors of the economy will continue to have access to the Internet during a pandemic, the Secretary of Homeland Security should develop a strategy outlining actions that could be taken to address potential Internet congestion.|
|Department of Homeland Security||2. To better ensure that securities market participants as well as organizations in other critical sectors of the economy will continue to have access to the Internet during a pandemic, the Secretary of Homeland Security should coordinate with other relevant federal and private sector entities about actions that could potentially reduce Internet congestion.|
|Department of Homeland Security||3. To better ensure that securities market participants as well as organizations in other critical sectors of the economy will continue to have access to the Internet during a pandemic, the Secretary of Homeland Security should work with other federal partners to determine if sufficient authority exists for one or more relevant agencies to take any contemplated actions to address Internet congestion.|
|Department of Homeland Security||4. To better ensure that securities market participants as well as organizations in other critical sectors of the economy will continue to have access to the Internet during a pandemic, the Secretary of Homeland Security should assess the effectiveness and feasibility, and undertake if warranted, a public education campaign to reduce such congestion.|
|United States Securities and Exchange Commission||5. To better ensure that important securities market participants are making adequate preparations for pandemic, the Chairman, SEC, should ensure that SEC staff take steps to ensure that critical financial market organizations are fully documenting the adequacy of their staffing levels to withstand high absenteeism and have formally developed alternative strategies in the event that congestion limits teleworking effectiveness.|