Broker Check

October 22, 1999
Reissued December 1, 1999

          Because of the importance of Y2K this is the first time in fourteen  years  of newsletters that there has been a reissue.


          As we  approach the millennium,  a high tech “bug”,  lurking  in much  of  the electronic equipment that controls our lives, is poised to  cause  a  disaster  of  epic proportions.   This  “millennium bug”,  also  known  by  the terms  “the year   2000 problem” and “Y2K”, is a computer glitch that has the potential to generate a three to six hundred billion dollar financial loss worldwide. 

What is the Millennium Bug?

          The Y2K problem was created decades ago when computer programmers attempted   to   conserve  on  expensive hard  disk  memory   by   shortening  the traditional four space date field to a two space date field by omitting the  first  two digits of the year. For example, the year 1999 would be identified as simply  99 in the numerous lines of software code. In the days of mainframe computers, memory was expensive and  conserving  two  digits in millions of  data fields  resulted  in significant savings in data processing expenses.

What Will Happen After 12/31/99?

          Nobody knows!  New York  City has  established  a  beachhead  in  New Zealand to get a several hour preview of what might  happen,  but nobody  knows what will happen or exactly when. What might happen is anything!  Your computer may not work. The lights and power may go off! Airplanes may fall out of  the  sky (some airlines have grounded all their planes on December 31 and January 1).

 Insurance Caution

          Most  insurance  policies will not provide coverage for  Y2K  related losses. While  many  professional  liability  policies  are  providing  coverage for liability  of professionals arising out  of Y2K  related losses,  virtually  all other policies exclude these losses. For  example, there is no coverage  if  you suffer a loss of income due to a Y2K related  interruption of your business (i.e. if your computers do not work and as a result you  lose income,  you will not be covered for the loss of income or the cost to fix the problem).

          It is up to all businesses to be proactive in preventing problems  that  could arise because of a systems failure.  Among  the many  things  to  review for  Y2K vulnerability are:

     • manufacturing/equipment systems  • payroll records  • accounting records
     • products made by you                                              • finance records
     • services delivered by you                                          • administrative records
     • facility/grounds systems and equipment                      • pension records
       • manufacturing parts/systems/services supplied by others    • security systems
     • human resource records                                            • warehouse systems
     • office/communication equipment                                • all hardware
     • customer sales and service systems                           • all software

          Also work with your customers and suppliers to make sure they are Y2K compliant and that their systems will interact properly with yours. These include, but are not limited to:

     • banks and financial institutions             • parts/system, services suppliers
     • government offices                              • transportation/delivery suppliers
     • utility companies                                 • maint enance/services suppliers
     • outside providers of human resources/payroll services
     • customers reliant on systems interaction with your company

How About Your Computers?

          Norton  2000 may  be the most comprehensive of  the PC  testers  you  can buy off the shelf. It will run from a CD-ROM and in addition to testing the BIOS, it will examine your entire hard drive and compile a list  of  applications  with  known problems. It will also check your Excel files and will fix spreadsheet cells that use a two-digit  date and   that  could  cause a  problem  in your  calculations.  Windows machines bought in the last year should be OK. No problem for  Mac users unless you own a 512K Mac.   Apple was smart enough to write software properly  15 years ago.

My Suggestion

          Now that Hurricane Floyd has come and gone, we have a good role model; treat Y2K  as you  would  a  hurricane.    Prepare  for  the  fact   the  power  and transportation and other systems might go out for a couple of days.

          Think about the following:

                    Candles                                    Flashlights
                    Batteries                                   Conserving heat (it’s cold in January) 
                    Radios (for news reports)          Disposable plates and utensils     
                    Alternative heat sources            Garbage bags (to prevent insects)
                    Food-canned, frozen                Cash (ATM machines may not work)
Water-                                      Full tank of gas (gas pumps may not 
                         • for bathing & washing          operate)
                         • for cooking
                         • for drinking

          If you are going out New Year’s Eve can you get home without streetlights and stoplights? 
         Will the police be able to respond to your call? 
         Will your burglar alarm go off?
          How will you get to work on January 1, 2 or 3?

Good Luck

To all of us!