Founded and operated on the basis of Cooperation, credit unions tackle the big job of disaster recovery planning together.
Disaster recovery is a common business practice among government, banks, and large manufacturing, however, it has only recently made its debut in the credit union movement.
The National Credit Union Administration (NCUA) released its first formal disaster recovery statement September 1, 1989. The policy outlines the process to create an institution-wide plan and makes clear that board members are responsible for reviewing and approving the document a minimum of once per year.
Concerned by the large scope of recovery planning, many credit union managers sought direction from their state league or associations.
“Our mission includes ensuring the health and continuity of our member credit unions” says Sean Rathjen, Director of Strategic Management Services at New York State Credit Union League (NYSCUL). “We had anticipated this need and began researching our options in late 1989. One of the first things we did was assemble several of our credit unions into a focus group to tell us their needs and concerns. The group consensus was that they expected us to be a major resource.” explains Rathjen.
Like New York, credit unions across the nation turned toward their league for training and development tools. Historically, credit unions are known to be careful shoppers, depending heavily on the experiences of sister institutions. Unlike banks, defined memberships decrease competition between credit unions, making cooperative training a natural occurrence.
NYSCUL began research and the education of staff. They took the recommended (team) concept and expanded it to include multiple credit unions. Creating a classroom environment for instruction where several credit unions could share information, ideas, and importantly costs.
The multi-credit union curriculum is broken into phases (see box). There are approximately four eight hour sessions, spread over four to six months grouped by the size of the institution. The sessions intended to give credit unions intense lessons, time to complete information gathering and other planning duties, while concurrently balancing daily responsibilities.
“The main reason our credit unions want us to help is because most don’t have the time nor expertise to develop an in-house plan, and they can’t afford to employ a full-time person for that specific responsibility. But, 4 or 5 of them together can pool monies and pay us for the instruction.” says Rathjen.
The drawback in the cooperative method is in the cooperation. It is imperative that the credit unions commit to meeting dates and deadlines. The planning sessions are made up of a chronological building process and will become ineffective if segments are not completed in order.
Georgia Credit Union Affiliates installed a cooperative disaster recovery planning program last year. Since that time several of their member credit unions have installed and tested successful plans.
“We looked at many methods of planning, from hiring a consultant to purchasing an off-the-shelf manual. What we decided would be best for our credit unions is a combination of the two, with us doing the consulting.” says Jeff Williams, Vice President of the Georgia Credit Union Affiliates.
“Our program offers training and a choice of two automated methodologies which we distribute from an industry vendor. By offering it to small groups, we can guarantee and affordable price and off-set our expenses.” explains Williams.
Other benefits derived from cooperative planning have included leverage buying of planning tools and vendor supplied equipment delivery guarantees, as well as the creation of an instant state-wide recovery network, and the joint creation of a hotsite.
Credit unions may have been called into the planning process later than most financial institutions, but this has not stopped them from creating possibly the most effective way of planning.
|The following are FDIC's guidelines for the contingency planning process for credit unions:|
I. Obtain commitment from senior management to develop the plan.
II. Establish a management group to oversee development and implementation of the plan.
III. Perform a risk assessment.
* Consider some of these possible threats (natural, technical and human).
* Assess impacts from loss of information and services.
IV. Evaluate critical needs.
V. Establish priorities for recovery based on critical needs.
VI. Determine strategies to recover.
VII. Obtain written backup agreements/contracts.
VIII. Organize and document a written plan.
* Assign responsibilities.
* Document strategies and procedures to recover.
IX. Establish criteria for testing and maintenance of plans.
* Determine conditions and frequency of testing.
* Evaluate results of tests.
* Establish procedures to revise and maintain the plan.
* Provide training for personnel involved in the plan's execution.
X. Present the contingency plan to senior management and the Board for review and approval.
Toni Gerard is President of Disaster Recovery Incorporated, Minneapolis, Minnesota (612) 823-0416.
This article adapted from Vol. 4 No. 1, p. 53.