Disaster Plan Must Include Provisions For Influenza Pandemic

On the morning of August 29, 2005, the lives of millions of Americans living along the central Gulf Coast changed forever. Hurricane Katrina, the worst natural disaster this country has experienced, resulted in the loss of over 1,500 lives and the destruction of public and private property of all types and descriptions along the Alabama, Mississippi, and Louisiana coasts.

Today, even as we continue to recover in the region, we are in the midst of another hurricane season. On top of that, there is a new potential crisis looming that credit unions must prepare for: an outbreak of influenza as a result of the worldwide spread of the Avian Flu. In fact, just a few weeks ago, NAFCU member Ed Collins, CEO of Lockheed Georgia Employees FCU, testified before Congress on behalf of NAFCU and CUNA on this very real threat.

As Collins told the House Financial Services Subcommittee on Oversight and Investigations, credit unions have learned a lot about disaster preparedness from dealing with Katrina and other natural disasters. Among the lessons learned are the importance of business continuation planning, keeping communications channels open, and dealing with health and safety issues.

Preparation is the key, of course. Last year, even before Katrina hit landfall between New Orleans and Gulfport, disaster recovery plans of local credit unions were put into action. At my credit union, Campus Federal, our business continuity plan was activated and all personnel were put on alert. Key operational systems were tested and backed up. Our business partners were contacted and arrangements made to secure support as needed following the storm.

What Wasn't Anticipated

Although we had an excellent disaster recovery plan in place, certain things could not be anticipated. Flood waters were contaminated, so we quickly created procedures for our tellers to deal with tainted money. We issued gloves and masks and created special bags in which to place these deposits for shipment to the Fed for redemption. Phone lines and cell transmissions were disrupted in those first days following the storm, but e-mail and especially text messages seldom failed. We were able to keep in touch with those seeking information.

Now NAFCU, CUNA and other financial trade groups are preparing for a different kind of disaster, a possible influenza pandemic. These groups are coordinating their efforts through the Financial Services Sector Coordinating Council, in which NAFCU is an active member. The FSSCC has been working to address the issues surrounding the resumption of business operations following a pandemic or any other widespread disruption. Along with the Departments of Treasury and Homeland Security, FSSCC is taking the lead in helping financial institutions plan for disasters. NAFCU has secured a seat on FSSCC's Infectious Disease Forum, the goal of which will be to disseminate best practices to financial institutions for their pandemic preparations. All credit unions should be paying particular attention to NCUA Letter to Credit Unions 06-CU-06, designed to increase the awareness of a potential influenza outbreak and provide guidance on how credit unions and their vendors can modify their operations and business plans to meet the challenges such a pandemic might bring.

Obviously, credit unions need to be prepared to move their operations offsite, if necessary, and to ensure that their members can access their accounts remotely from the credit union's website, through automated teller machines, and shared branches and outlets, if the credit union participates. We know from previous disasters like 9/11 that record retention is a key concern as well.

Pandemics raise specific issues that many business continuity plans do not address. Pandemics do not destroy buildings or power grids. Rather, they infect large portions of the population with a terrible disease. The infections come in multiple waves that last up to eight weeks. Some experts predict workplace absenteeism rates could reach 40% during each wave of infection. At Campus Federal, key staff members already have the ability to remotely access their workplaces via a virtual private network on the Internet. Several of our staff members are telecommuters which, in the case of a pandemic, will help us deal with absenteeism issues.

Global Consequences

In addition, while a tornado, fire, power outage or hurricane may effect a specific building, city, state or region, a pandemic will affect a large part of the globe at once. Moreover, while many disasters affect a small number of economic sectors, a pandemic will affect every sector with the same absenteeism as noted above. Therefore, a credit union's vendors will suffer through the same pandemic-related issues at the same time.

NCUA is currently reviewing credit union preparedness as part of the agency's risk-focused examination process. It is issuing guidance to its examiners on disaster recovery issues, focusing on records preservation, encouraging credit unions to increase member access to accounts through the Internet and urging greater use of the Treasury's direct deposit program.

NCUA has indicated that it will issue additional guidance concerning business continuity planning in the form of a risk alert. Until then, credit unions can find additional planning assistance at www.pandemicflu.gov and www.fsscc.gov.

At NAFCU's annual conference this year, we will conduct a breakout session on the lessons learned from the Gulf hurricanes and other natural disasters. I know that from other credit union CEOs that I have talked to in the Gulf region, there were many contingencies that we did not foresee, but there were also countless stories of perseverance and can-do spirit that made the difference in getting communications restored, branches reopened and cash delivered to members.

Credit unions, large and small, came together for the common purpose of helping sister credit unions, their members and their staffs, when the need was greatest. In the final measure, I feel we will all look back at last year and refer to it as a defining moment, not only in our nation's history, but our industry's history. I am proud my credit union was able to step up and play a role in helping those in need, and I will forever remain humbled by and grateful for the support received.

John W. Milazzo, Jr. is vice chairman of NAFCU and CEO of Campus FCU in Baton Rouge, La.