Disaster Recovery Journal- Volume 19, Issue 4 - Fall 2006 Issue

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Fall 2006 Issue

DISASTER RECOVERY
JOURNAL

P. O. Box 510110
St. Louis, MO 63151
(314) 894-0276
Fax: (314) 894-7474
Internet www.drj.com
E-mail drj@drj.com

PUBLISHER
Richard L. Arnold, CBCP
richard@drj.com

EDITOR-IN-CHIEF
Jon Seals
jon@drj.com

SENIOR EDITOR
Janette Ballman
janette@drj.com

COPY EDITORS
Richard Sandhofer
richards@drj.com
Pamela Clifton
pamelaclifton@hotmail.com

ADVERTISING
Robert Arnold
bob@drj.com

_____________

Corporate

President/CEO
Richard L. Arnold, CBCP
richard@drj.com

Vice President
Robert Arnold
bob@drj.com

CONFERENCE COORDINATOR
Patti Fitzgerald, CBCP
patti@drj.com

CONFERENCE REGISTRAR
Merce Knese
mercedes@drj.com

CIRCULATION
Laura Baugh
laurab@drj.com

EXECUTIVE COUNCIL
Pat Corcoran, IBM
Michael Croy, Forsythe
Jeff Dato, MBCP, KPMG,LLP
Edward S. Devlin, CBCP, E.S. Devlin
James Hammill, CBCP, JMH Consulting Inc.
John Jackson, Albright Advisors, LLC
Patricia McAnally, SunGard Availability
Jerry Montella, Mail-Gard
Randy Till, CBCP, MasterCard International
Brian Turley, Strohl Systems
Belinda Wilson, CBCP, Hewlett-Packard
William Worsley,CBCP, Dow Chemical

INTERNATIONAL
CONTACTS
England: Thom Hetherington
Business Continuity
Phone: 0161-237-1007
thomh@tempus.demon.co.uk

Australia: Anthony J. Harvey
Journal of Business Continuity
Phone: 0011-613-953-0055-8
fax: 0011-613-953-0528
sector@notability.com.au

Japan: Shinji Hosotsubo
Quake Japan Co., Ltd.
Phone: 03-3215-2880
fax: 03-3215-2881

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Ice, Gas & Money

By BECKY COHEN, CBCP

Warning! When a natural disaster such as a hurricane strikes, the public can be very persistent about having access to its money. That’s because in a storm aftermath, there are usually three critical things in short supply: food (including ice and drinking water), gas, and money. So the public expects banks to remain open, regardless of the obstacles.
If your physical locations are knocked out, if your ATMs do not function, if you cannot supply money to desperate customers, you are going to create inconvenience and add to the general misery of the situation.
Now is a good time to review and update your bank’s disaster recovery plan. Currently, we are in the middle of the peak hurricane season, which lasts from August until October. This year the National Hurricane Center forecasts that the full season, from June to November, would be more active than normal. The center predicted eight to 10 hurricanes, compared to six in an average year.
Last October when Hurricane Wilma bulldozed across the Florida peninsula from west to east, destroying hundreds of homes and creating $14.4 billion in damage, BankAtlantic (assets: $6.1 billion), Fort Lauderdale, was among the first banks in its market to reopen after the storm’s onslaught.
In this article, I draw on some of the lessons my bank learned from last year and offer some recovery tips for other financial institutions. My advice is meant to apply not only to hurricanes, but for any type of natural disaster – such as tornadoes, floods, earthquakes, or blizzards.

Lessons Learned
In the past, many banks in the line of hurricanes learned the hard way that lack of preparation can be devastating to businesses and customers. Inability to reach employees, lack of power, a rush on ATM inventory, a frightened and confused public all added to chaos. This year, banks – especially those based in Florida, which has been hit several times in the past two years – are making business continuity an even higher priority than normal.
Banks have traditionally struggled to reopen or to work at full capacity immediately following a storm. Customers’ frustration at the inability to access their money creates poor relationships that take a long time to repair. These can be avoided – or at least mitigated – with more comprehensive planning and preparation.
For banks located in disaster-prone areas, there are three important elements to preparation:
1. Analyze what went wrong during previous disasters and improve it.
2. Assess what went well and enhance it.
3. Evaluate what might be different this year and attack it.
In order to get a full picture of the disaster challenge, it’s important to bring in experts to work in harmony with the community and your team. Meteorologists, community outreach specialists, utility executives, emergency operations managers, even local politicians can provide insight into how the region is preparing for a possible disaster. Using their knowledge, skills and advice, banks can make reasonable action plans that utilize all the capabilities of those around them.

What Went Right and Wrong?
If you’ve been impacted by hurricanes, blizzards, or other weather phenomena, ask yourself what went wrong with your disaster response. Was there tremendous damage to the actual branches (“stores”)? Such damage ultimately affects other aspects of recovery – reopening, communications, employees, and so forth.
Second, were you able to stay in touch with key people? Blizzards and hurricanes dramatically interrupt communications – even cell phones take a hit. If you couldn’t contact essential people, the ability to conduct business, even at a reduced pace, is severely restricted.
Third, did you keep your customers informed? Customers need to know when their banks will return to operations. From TV scrolls to newspapers and radios to online resources, you need to get information out so that customers understand that you are making an effort to meet their needs.
Finally, did you work with the community? When very bad weather hits, people bond in ways they never have before. Banks can be a resource for the community if emergency operations need a setting for outreach.

How to Prepare
By assessing the above, banks can perform better, even during the most severe natural disasters. Some key recommendations:
1. Have a written plan well in advance that is available to all managers. This should include all phone numbers, cell numbers, beepers, and e-mail addresses. There should be employee assistance programs that offer services such as child care – since schools are frequently closed following a storm. Create car pool options in advance to conserve gas.
2. Make sure your stores (branches) can withstand the impact of the weather. It’s impossible to reopen a roofless store. It’s difficult to get glass windows repaired immediately. Take sensible steps to preserve the building.
3. Stay in touch with your team. Keep lists of all contact options. Invest in satellite phones. If land lines are down, electricity is out and cell phones are spotty, satellite phones can be lifesavers. Make sure there are multiple people reaching out to one another. A phone tree breaks down if there’s one unreachable person; cover your bases. If there’s an option to dial in, use conference calls whenever possible so that everyone is on the same page.
4. Select hubs. Realistically, it may not be possible to open all stores. Select high-volume, high-traffic locations to be the first to reopen. Think strategically. Purchase electric generators if there’s a probability of electricity being compromised.
5. Think technology. Our dependence on computers and technology comes clearly into focus when we’re without their services. Have backup protection. Get electric generators to maintain computer services. Have your systems reviewed in advance and given a “clean bill of health” so that any downtime is minimized.
6. Get a picture of seasonal weather forecasts. It’s hard to predict the weather – even for the meteorologists! But experts in the weather field can offer insight into the likelihood of devastating weather.
7. Offer something to the community beyond banking services. Provide water if you can. Help noncustomers if their banks are less prepared (they can be future customers). Have a child-friendly atmosphere. Stay open later and longer. After the fact, be forgiving. Don’t place late fees on loans, mortgages, etc. Remember, the post office has a lot to deal with, too.
8. Be good to your employees. In difficult times, families come first. Understand your employees’ conflicts – and try to help.
9. Get the word out. You will be competing in the media with schools, grocery stores, public facilities, government buildings – virtually the entire community – to get the word out about your bank. You won’t be everywhere, but the more media you work with, the more likely the public will know about where you are open and operational. Contact TV stations, radio stations, newspapers (both business and neighborhood writers), and online resources. Put information on your toll-free number and update it daily. Put signs up that point people to the nearest open store.
10. Move quickly. Be flexible and be prepared. When news that a storm is heading your way is revealed, begin responding as if it’s a fact. Don’t wait, hoping the news will change. It’s a lot easier to drop your plans midway than to start them up too late. But remember, try as you might, you can’t know everything that will happen. Maintain an open mind and think on your feet. Surround yourself with others who can do the same. There will be enough problems in times of crisis – inflexibility shouldn’t be one of them.

It’s Always Something
The banking industry has forged its own strategies and learned to mirror other tactics to best serve its customers. For example, taking a page out of retailers’ policies, some banks are remaining open longer or using holidays as a launching point to generate business.
In times of crises, bankers need to think out of the box again. Planning and preparing is the best solution. Waiting and watching and hoping for the best never did work, and that type of thinking can be more devastating than the storm itself.

Becky Cohen, CBCP, is business continuity officer for BankAtlantic in Florida. Cohen has more than 10 years of experience with continuity planning and more than 20 years of management experience in mortgage banking.