A leader of Morgan Stanley Dean Witter & Co.'s year-2000 effort predicted minor glitches would pervade computer programs during the millennium weekend.
"We're going to have bugs," said Maggie Parent, a Morgan Stanley principal and member of its year-2000 project leadership team.
Few banks will be spared, she predicted in a speech last month to a conference organized by the Federal Reserve Bank of New York. Institutions will need anywhere from one or two days to as long as a month to eliminate the problems, she said.
"We'll resume normal functioning, but we won't be down for the same amount of time around the world," said Ms. Parent, who is responsible for managing year-2000 compliance among Morgan Stanley's clients, vendors, subsidiaries, regulators, governments, agencies, custodians, and operating utilities.
She said Morgan Stanley is discovering an average of 50 to 100 bugs a day, even after doing "a huge amount of testing."
Morgan Stanley also is preparing for potential delays in settlements and transfers and possible liquidity and capital adequacy problems.
Highlighting the difficulty of predicting exactly what will happen, Ms.Parent warned, "There could be catastrophic failures.
"What should we plan for? A hiccup, serious situation, recession, or Armageddon?"
At this stage of its preparation, Morgan Stanley is focusing on reducing risk by preparing contingency plans and simulating computer breakdowns.
Companies should protect against bugs by scanning code in real time. "What if we find a new kind of bug on Jan. 1?" she asked. "We need to make a lean and mean scanning code to rip through our network."
To guard against getting "bad data" from computer-connected third parties, she recommended building "defensive data filters."
Nontechnical business departments also have a "tremendous amount of work" to do, Ms. Parent said. Tasks include establishing trading policies, reducing settlement exposure, developing funding strategies, analyzing credit and counterparty exposure, and managing client expectations.
Organizations also need to spell out the situations that would cause them to shut down. "If, for example, Swift is down, am I still in business?" asked Ms. Parent, referring to the Society for Worldwide Interbank Financial Telecommunication bank messaging network.
Preparations should even carry over to nitty-gritty details.
"You need to consider the capacity of the call centers and who will cater food for the staff who are working" in command centers on the New Year's weekend, Ms. Parent said.
The good news is that the conversion to the euro went "very well, flawlessly," she said.