A massive snowstorm and icy weather that swept through the Southwest, Midwest and East Coast last week turned into a major test of contingency plans for pension funds and money managers to deal with an emergency.
On Feb. 4, the University of Texas Investment Management Co., Austin, which oversees $25 billion, closed its office “due to inclement weather,” according to a phone announcement.
“We have a great deal of electronic connectivity for our entire staff — investment, support and control — including PCs and handheld devices,” said Bruce Zimmerman, UTIMCO CEO and chief investment officer, referring to the fund’s staff working off-site.
“Everyone can access our network, Bloomberg and various other information providers and services. That said, a number of us were in the office as well.” Mr. Zimmerman was among about 10% of the staff that came into the office, he said.
The $94.9 billion Teacher Retirement System of Texas and the $21 billion Texas Employees Retirement System, both in Austin, also closed their offices Feb. 4 “due to winter weather conditions,” according to separate announcements by the pension funds.
The $3 billion Dallas Police & Fire Pension System also closed Feb. 4 because of “inclement weather,” according to its website.
National Weather Service advisories for Dallas on Feb. 4 called for 3 to 8 inches of snow and a temperature of 24 degrees. In Austin, the forecast warned of freezing rain, sleet and light snow and ice on most roadways causing “extremely dangerous” travel and a temperature of about 30 degrees. The average high temperature for early January in Austin is 62 degrees.
Earlier in the week, the $10.2 billion Illinois State Board of Investment, $8.3 billion Chicago Public School Teachers’ Pension and Retirement Fund and the $7.3 billion Missouri State Employees’ Retirement System all operated under off-site contingency plans.
“This is a disaster, so we are operating accordingly,” said William R. Atwood, executive director of the Chicago-based Illinois State Board, who was working from home Feb. 2. “ISBI has adopted a disaster recovery plan, contemplating any number of potential disasters and the necessity of working remotely.”
“Among other things, this gives us a chance to work in a disaster recovery environment, work out whatever kinks there are, and determine what works and what doesn’t. So far, so good … we had our regularly scheduled staff meeting, via teleconference, at 9 a.m. (Feb. 2). We are able to remotely access our relevant systems, work with our custodian, communicate with retained investment professionals, and monitor the portfolio.”
ISBI closed its office early on Feb. 1 and was closed all day Feb. 2, Mr. Atwood said. Normal office hours were back in place Feb. 3.
“We are fully staffed,” Mr. Atwood said. “I gave the staff the option of not coming in if they felt uncomfortable. But everybody came in.”
“It was pretty much seamless,” Mr. Atwood said of the switch to contingency plans. “We didn’t miss a beat.”
The Chicago teachers fund closed its office Feb. 1 and remained shuttered through Feb. 3, but plan employees worked off-site.
“We are working from home, which is seamless with being in the office as investment staff have laptops that (are) also their work computer when in the office,” said Kevin R. Huber, executive director, working from home Feb. 2. “We are able to remote into our systems if needed and obviously can access any website of the respective managers.”
The fund initially intended to reopen Feb. 3 but remained closed because of the effects of the snowstorm.
“Yes, one more day at home,” Mr. Huber said. “In today’s era of technology, working remotely presents no challenges and the safety of our staff is our biggest concern. The inability of Chicago and the other local areas to get the side roads cleared in a timely manner, the lack of dependable public transit, a majority of schools remaining closed, and the brutally cold weather were the major factors behind the decision to remain closed one more day.”
The low temperature in Chicago on Feb. 3 was zero.
The Chicago teachers fund reopened its office Feb. 4.
The snowstorm has had “no significant impact” on investment operations at the Missouri Employees’ plan, Jefferson City, said Executive Director Gary W. Findlay, noting that “any critical activity can be handled remotely by staff, thanks to technology.”
“I closed the office at noon yesterday because conditions were becoming extremely hazardous,” he said when contacted at his home Feb. 2. “I think a good indication of the severity of the situation is the fact that Interstate 70 was shut down from St. Louis to Kansas City. As I understand it, this is the first time that had ever happened.”
The Missouri plan’s office closed Feb. 2 “since ground transportation is next to impossible because of snowdrifts,” Mr. Findlay said.
“I think it would be a mistake to overstate the degree to which this was a problem,” even though the office was closed, Mr. Findlay said. “I’m confident that most major retirement systems have business continuity plans that provide for alternative arrangements for conducting business. This (snowstorm) really did not create any significant obstacles.
“It’s obviously much more convenient when we are able to all be together, but we also know a lot about being flexible.”
The Missouri system’s office reopened Feb 3, Mr. Findlay said from his office, noting, the roads by then were generally clear. “Our only concern is the cold. When I got to work (in the office) this morning (Feb. 3), it was 14 below zero, actual temperature, not wind chill,” Mr. Findlay said.
“We’re back to normal staff size. Pretty much everybody make it in today (Feb. 3). It’s back to business as usual.”
The offices of the $24.6 billion Connecticut Retirement Plans and Trust Funds, Hartford, operated on a delayed opening — 10:30 a.m. on Feb. 2 — a step directed by Gov. Dannel P. Malloy for all state employees considered non-essential, because of the severe weather.
The $641 million St. Louis City Employees Retirement System was closed all day Feb. 1 and employees were permitted to come into the office two hours late on Feb. 2 because of the snowstorm, said Robert Parks, human resources assistant, who made it into the office.
The St. Louis fund’s office opened as usual Feb. 3.
At Ariel Investments, Mellody R. Hobson, president, said she put the Chicago-based firm’s disaster program into effect Feb. 2.
“We told (staff) not to come into the office and work from home,” unless they live within walking distance and choose to come into the office, Ms. Hobson said.
However, Ariel’s operations “are fully up and running,” Ms. Hobson said. “About three-fourths of our people have laptops provided by the firm,” enabling them to work from home, Ms. Hobson said.
“It’s business as usual,” Ms. Hobson said, although Ariel canceled meetings Feb. 2.
Ms. Hobson and Merrillyn J. Kosier, executive vice president and chief marketing officer-mutual funds, live close to work and were in the office Feb. 2.
Cheryl Cargie, Ariel’s head trader, was also working in the office Feb. 2. She stayed in a hotel in the same building as Ariel’s offices the night of Feb. 1, so trading operations could continue as normal Feb. 2, Ms. Hobson said.
In such an emergency, Ms. Hobson said, “Our system forces us to affirm we are all OK,” through a series of e-mails and phone calls to each employee, requiring a response.
“We were hunting down six or seven people out of 80” who hadn’t responded, Mr. Hobson said, but all were later found to be safe.
In addition, call volume from other investment-related professionals was down considerably, especially from the Midwest and East Coast, including New York and Boston, which also were affected by bad weather, Ms. Hobson said.
Ariel’s office was back to normal operations on Feb. 3, Ms. Kosier said. “We have a full house” of staff back in the office, she said.
The snowstorm “tested the contingency plan” Ariel has had in place, and the plan worked “beautifully,” Ms. Kosier said.
At Fidelity Investments, based in Boston, spokesman Vincent Loporchio said, “It’s been essentially business as usual.”
“We (had) a large number of employees in the office (Feb. 2), Mr. Loporchio said. But the firm also had employees who were working remotely because of difficulty in getting into the office.
“We have business contingency plans in place that enable us to continue to service our customers regardless of weather conditions,” Mr. Loporchio said.
On Feb. 3, Fidelity was back to its typical operations, Mr. Loporchio said. Despite the weather disruption, Fidelity operations were “seamless,” Mr. Loporchio added.