It seems the Canadian government is not so optimistic regarding the "Iron Triangle" and large organizations. As well, these articles point out that all mission critical "fixes" will not be completed on time. I would not find these articles so alarming in their entirety, except for the fact that Industry Canada has chosen to use this information on their site to educate SME's regarding financial protection for Y2K business interuptions... http://www.can2k.com/ click on Text version, than What's new in the sidebar - #3 - Y2K business interuptions I'll cut and paste the first article - the rest you can read at the above website.

Val.

Article #1

Word count parts one and two 1575

Financial Protection from Y2K Business Interruption for Small/Medium Businesses

By Doug Lagasse

Part One

Is It Necessary? How Do You Get Started?

Y2K. It is the most confusing global phenomenon in recent times. As a result, many businesses and organizations are unprepared for the economic upheaval that will be caused by Y2K induced business interruption. Rather than plan for possible financial consequences, many are taking a wait and see attitude. This means they are rapidly losing time to enable the important and easy options they have to protect themselves. They need to decide now. Does Y2K pose an unacceptable financial risk? Is it severe enough that I need to act to protect my interests? Are there actions I can take now that will make a difference?

The answers are all affirmative. In the minds of 90% of people who have thoroughly investigated Y2K, the same conclusion is reached. There are going to be business interruptions and although no one can say with certainty where they will occur, they are likely to be severe. Here are the reasons why businesses, particularly small and medium sized (SMEs) organizations, would be wise to protect themselves from the financial risks caused by Y2K related business interruption. In addition, let's briefly review some of the major impact areas and actions to take now that will help you substantially later on. Remember that most large businesses have already developed business continuity plans-operational and financial. Yet most SME's are not even considering doing the same because they think that fixed computers = no problems. Unfortunately, it doesn't end there. The major Y2K risk has always been from business interruption and the ensuing financial pandemonium unprepared businesses will have to face. Don't be so alarmist, you say? Please allow us to make our case.

Summary of major indicators that validates Y2K as an unacceptable financial risk to your business.

Critical Systems are not all ready. Volumes of readiness surveys, Y2K project managers, business experts and regulatory bodies all concede that many large organizations, including those that form the iron triangle (financial, power and telecommunications) of our infrastructure, are not going to complete all mission critical fixes on time. Many Y2K projects have slipped way beyond original timetables. Many will not have time to test the fixes they complete. The conclusion is that there is a 100% probability of numerous random system failures occurring in the first three months of 2000. This extended window of failures (less than 15% of failures are likely to occur on Jan.1, 2000) will erode market stability. Downtime will be the enemy.

Watch the dominos. The dilemma of interdependability indicates that if one component of a complex chain of computers systems fails, the entire system is affected. Obviously this systems dependability extends to operations that, as an example, support a financial transaction, a power grid, a transportation system or a communications network. Since the systems that support the chain are owned and operated by many different organizations it is impossible to know in advance what will happen. There are many thousands of these inter linked networks-each one supporting critical functions of many thousands of SMEs.

Sustainability. Many disruptions will occur simultaneously. The question is not if there will be breakdowns. The real question is, "can the repairs be completed quickly and comprehensively enough to sustain global and local infrastructures?" Unknowns will affect consumer confidence-an impact in itself severe enough to trigger the last two recessions.

Financial Market Stability. Financial markets are extremely volatile and perceptions, true or false, of minor or major disruption, are just as capable of triggering massive global financial uncertainty as real events are. Since the systems that carry out those transactions are also at risk, and potential Y2K failures will be on everyone's radar, market calamities are likely to be more severe than normal.

Global Y2K Status. It is accepted fact that major large businesses and organizations running the infrastructure in Russia, Asia, Europe, Africa and South America are not going to be even close to completing Y2K fixes on time. As well, SMEs in those countries are almost completely unprepared. Of course, many are less technologically dependent but that also means they will be even less aware and prepared for the indirect affects.

Meager Global Emergency Support Resources. Global banks and monetary funds are already stretched to their limits. There is little capacity to bail out failing institutions or economies.

10-20% Of SMEs Will Be Unsustainable. Numerous leaders of business and regulatory bodies have been quoted as being extremely concerned over the lack of preparedness of SMEs. Many SMEs have misinterpreted these warnings to mean they only having their computers to worry about. Industry analysts have stated that unless efforts increase, many small businesses will not be around to celebrate the real millennium in 2001. It can be said, without exaggeration, that a large portion of SMEs are marginal operations that cannot sustain decreased revenues without serious consequences. Those providing non-essential services or products will be particularly vulnerable.

Scarce Credit. As banks experience imminent cash withdrawals, requests for credit to finance computer fixes and business disruption, loans will be harder to get or renew. Generally banks have less than 5% cash reserves and must plan well in advance to satisfy unexpected customers needs.

Your Line In The Sand

To the wary, any two or three of these indicators provides an unacceptable level of risk. Is this combination of risk sufficient enough to warrant some action to protect the financial viability of your business? Will your line in the sand be the realization that, all things considered, it is infinitely better to be prepared for the worst than under prepared? If you could chose the top 20% of actions that would give you 80% of the protection that was needed, would it help you decide to act? If you remain unconvinced, we urge you to spend just a few more moments yourself or get someone to retrieve the information and documents at www.y2ksupply.com/sixsteps.htm and www.y2krg.com

Part Two

Some Impacts and Remedies of Y2K Business Interruption for SMEs

Y2K Ready? Suppliers and customers may have inquired about your Y2K systems status or contingency plans. If you do not communicate something meaningful, you run the risk of losing important accounts. Many large and medium sized businesses are planning to cut off suppliers they are not confident in. You may never know until it's too late. Be careful because any statements you make that cannot be substantiated may haunt you later. You will have to decide if silence from others indicates they are unprepared. They may be forced to make similar conclusions about you. Customers may migrate to firms they are confident are prepared. These situations require a thoughtful, coordinated and realistic communications plan that assures major suppliers and customers of your Y2K ready status (current and future) and exactly what that means. If you are not ready you have to decide whether to remain silent and hope for the best or deal with a potentially awkward situation with promises you will held accountable for. Don't be tempted to use the mobius refrain of, "I will be as ready as my suppliers are," as an excuse.

Credit tightens up-smile harder. Many banks already want to see costs of Y2K projects as proof of action (some will settle for legally binding written assurances) before issuing new credit and possibly during upcoming annual credit reviews. Larger businesses may be required to substantiate contingency planning efforts. Would you lend money to a company that may not be prepared for Y2K? The impact of this suggests it would be wise to improve your cash position, fix long term interest rates as low as possible, cut fixed expenses, hold off expansion plans and substitute short term gain for long term expectations.

Hoarding. As uncertainty increases and the prospects of deflation (and lower prices) seem more likely in the last half of 1999, people will hoard cash and necessities and delay many unnecessary purchases as they take a wait and see attitude. This will reduce consumer spending in many areas and start the business interruption cycle. You may wish to anticipate these problems or opportunities now.

Employees. Many employees will soon be more concerned about their families than their careers, as the Year 2000 looms closer. Since, in many cases, they are a key component of your contingency and communications plans this needs to be addressed or it may end up being everyone for themselves.

Business Relationships. In addition to the business relationships described above, internal relationships between partners, directors, executive and management levels and investors may be strained as differing opinions about Y2K are discussed. This can fatally handicap required action. Strong leadership at the top levels of a business, exemplary management and steadfast employee commitment are essential.

The End Game

There will be casualties. But we will endure (no doubt in various stages of undress) and learn and eventually time will heal the wounds of those that have survived. To believe anything else is to ignore the history of human ingenuity in crisis situations. History also suggests humans are better at cleaning up than preparing. Y2K is no different except that this time everyone has a long lead-time to prepare-operationally and financially. That means, that after the fact, there will be few excuses that carry any weight with those who did prepare and were affected by those who did not. The end game will take place in those, less than happy, situations.

Doug Lagasse is Research Director at the Year 2000 Research Group (Y2KRG). Their latest publication, How To Financially Protect Your Business from Y2K Business Interruption-The Essential Workbook, is now available for ordering. For more information go to www.y2krg.com or call 888-362-8744.

-- Anonymous, May 14, 1999

Answers

My apologies! I didn't mean to include the advertising information on behalf of the company where this document originated. As I stated above, this particular article drew my attention due to the fact that Industry Canada chose to use this information, and there are some very solid claims made - not the usual wishy, washy stuff. Instead of the word "may" we are seeing "will". Those little words make a big difference in my interpretation of risk assessment. I might add, my views are based on an individual perspective, rather than from those of you actually involved in actual remediation.

-- Anonymous, May 14, 1999

Val, i am sorry but there are way too many glaring problems with this article to mention them, the worst being '100% probability of numerous random system failures occurring in the first three months of 2000. This extended window of failures (less than 15% of failures are likely to occur on Jan.1, 2000) will erode market stability. Downtime will be the enemy' but the aurgument too most of this aritcle, 'based on what'. Then after all this speculation you admit the article is by someone trying simply to make on the hype of Y2k. When you see ads for the circus saying its the greatest show on earth do you rush out and buy the tickets, its the same thing. this guy is selling you Y2k fixes, and this post has no place on this forum. Graham

-- Anonymous, May 17, 1999

Graham, if you access the link Val provided, you will find that the site where the above can be found is the Can2k web site. "CAN2K is the awareness component of the Year 2000 initiative launched by Industry Canada in conjunction with the Canada-Pennsylvania Partnership Council."

The site is sponsored by Industry Canada, the Commonwealth of Pennsylvania, the Learning Bell Company, Post Canada, Royal Bank Financial Group, IBM, and the Business Development Bank of Canada. There is the usual disclaimer:

"This resource has been developed as part of the CAN2K initiative as an information service only. Every effort has been made to ensure the accuracy, currency and reliability of the content. However, the Canada/Pennsylvania Partnership Council, Industry Canada, the Commonwealth of Pennsylvania, their partners, and any organizations associated with the CAN2K campaign accept no responsibility in this regard. In addition, no liability, whether direct or implied, is assumed for resources or services mentioned nor is any liability assumed for any actions undertaken on the basis of information contained in this resource. Consultation with a Y2K solution-provider is strongly advised and legal advice may also be necessary."

The "ad" you take exception to is from: "The Year 2000 Research Group Inc., formerly The Government Source, was formed in early 1991. In late 1996, we began work on the YEAR 2000: The Business and Government Survival Guide. With the participation from more than 80 companies and government departments, we assembled a team of more than 1,500 Year 2000 experts. By sharing strategies, approaches, and experiences with these Year 2000 experts, we distilled an anthology that is a uniquely North American collection of Year 2000 projects, case studies and experiences."

A partial list of previous associates and customers of Y2KRG includes: Agra Monenco, AMS Canada, Bayer Corporation, Bellcore, Canadian Bankers Association, Canadian Information Processing Society, CGI, Deloitte and Touche, DMR Group, Gartner Group, GEAC, IBM, Industry Canada, KPMG, Lang Mitchner, LGS, McMillan Binch Library, MicroFocus, New Brunswick College Library, Oracle Canada, Public Works and Government Services Canada, and SAP.

While anyone is of course free to disagree with the conclusions or expertise of anyone or any company, as I see it, the Year 2000 Research Group has the respect of many major government groups and business corporations, both inside and outside of Canada. For that reason alone, what they have to say does have a place on this forum, just as anything written by Gartner Group or IBM is deserving of consideration.

-- Anonymous, May 17, 1999

Thanks, Bonnie! I was in the midst of carefully wording a reply to Graham's post, after reviewing the Can2k website, but you've explained it better than I could. So I won't continue to elaborate, except to state that I'm not trying to instigate anything, just the fact that Industry Canada chose to use this content on their site, and it was worth reading for that reason, and the fact that it does relate to the power industry. I also believe that the credibility of any businesses/corporations that deal in Y2k solutions, advice etc. would be considerably at risk in the future, should their assumptions be too far out of line. In determining my opinions on the advice, products etc. being offered by a particular business, I find it necessary to find out exactly the scope of their business, how long they've been in business and whether their business survival will depend on the relativity of any statements they make now regarding Y2K issues. And Graham, if I did buy tickets to attend that circus, and it was not what I was led to expect, I wouldn't go back!

-- Anonymous, May 17, 1999