Business Continuity Planning in Japan

by Neil Katkov, PhD, May 11, 2005


Celent estimates that banks and brokerages in Japan will spend US$866 million on business resiliency in 2005, a figure that will grow to approximately US$886 million in 2007.

The past few years have seen growing concern over disaster preparedness in the Japanese financial industry. The country's political and financial capital, Tokyo, lives under the constant threat of large-scale damage from a major earthquake. The September 11 terrorist attacks and more recent events such as the SARS outbreak of 2003 generated a new wave of interest in disaster recovery programs. In a short period of time, business continuity planning (BCP) has become an established concept in Japan: More than 75 percent of financial institutions have some sort of business contingency protocol. Nevertheless, many firms still lack full-fledged BCP programs that address both the systems recovery and operational continuity aspects of disaster preparedness.

Focusing on the major domestic and foreign banks and securities firms, Celent’s new report, Business Continuity Planning in the Japanese Financial Services Industry, examines the history and current state of BCP efforts in Japan. The report analyzes BCP drivers and barriers, the role of regulators, and typical system backup levels and operational continuity practices at these firms, as well as at market institutions. The report concludes with an account of future trends in BCP and Celent's recommendations for improving industry-wide BCP preparedness in the Japanese financial markets.

"The relative lack of information exchange among financial institutions and their regulators regarding business resiliency is a potentially serious problem," comments Neil Katkov, senior analyst at Celent and author of the report. "To maintain the integrity of the markets during a crisis, all participants—including brokerages, banks, exchanges, and clearing institutions—need to be on the same page regarding recovery capabilities."

The 41-page report contains 14 figures and 7 tables.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents


Executive Summary 3
Introduction 4
BCP in Japan: Drivers and Barriers 6
Business Continuity Planning 9
BCP Overview 9
BCP in Japan 11
Regulatory Guidance 13
Tokyo Stock Exchange 14
Budgeting 17
Systems Recovery 20
Backup 21
Vendors 21
Recovery Priorities and RTO 22
Architecture 27
Operational Continuity 31
BCP Committees and Planning 31
Alternative Office Facilities 33
Alternative Recovery Methods 33
Communications 34
Conclusions 36
BCP Preparedness Comparison 36
Future Trends 37
Recommendations: Focus on Capital Markets 38
Objectivity and Methodology 40
About Celent 41

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