A Prescription For Disaster

A large-scale natural or man-made disaster in the 21st century is a frightening possibility. The financial services industry learned valuable lessons from the 2004 and 2005 hurricane seasons and from the 2001 terrorist attacks.

However, disaster preparedness has become more complex because planning for pandemic influenza has been added to the mix of disaster scenarios.

NASCUS and state regulators are encouraging credit union executives to take disaster and pandemic influenza preparedness seriously. Examiners are checking credit unions' disaster recovery and business resumption plans to ensure they are ready for any type of disaster situation, small or large.

Although regulators have noticed progress in these plans, more work needs to be done. Recognizing the unpredictability of disasters, preparedness should be a top priority for credit union executives and industry leadership.

Planning for a pandemic influenza outbreak is different than preparing for fire, snow, earthquake or hurricane. The possibility of a pandemic influenza outbreak places a level of complexity on business resumption plans. Thorough plans need to be developed and testing must occur.

The federal government recommends the private sector assume that up to 40% of employees will be absent for two weeks at the height of a pandemic wave. During the early and later stages of pandemic, expect lower levels of staff absent for a few weeks (Implementation Plan for the National Strategy for Pandemic Influenza, http://www.whitehouse.gov/infocus/pandemicflu). This expected level of absenteeism requires short- and long-term planning.

Regulators are informing credit unions that key elements must be included in any disaster recovery and business resumption plan. First and foremost, employee and workplace safety must be protected. Credit unions need to provide disaster preparedness resources and education to employees. If employees understand the significance of disaster preparedness at work, they will recognize the imperativeness of preparation in the home. The Center for Disease Control (CDC) recommends that homes be prepared with at least two weeks of supplies. Credit unions also need to review their sick and leave policies.

Credit union leadership should also be aware of the U.S. government's plans for disease containment during a pandemic influenza. These actions include quarantine, social distancing, closing of places of assembly and restrictions at borders. This means closed schools, stopped public transportation and limited access to stores and facilities.

Speculation abounds about the probability of a pandemic influenza outbreak. At the 2006 NASCUS Summit, Dr. Blake Caldwell of the CDC explained that a pandemic influenza outbreak is not a matter of "if" but "when." She stressed that planning should be a priority of any business leader. Dr. Caldwell pointed to past pandemic outbreaks in the United States.

Following World War I, soldiers returning home brought the 1918 Spanish Influenza to the country causing thousands of deaths. Social distancing measures saved many lives in 1918, and those same types of measures would be instituted if a pandemic influenza outbreak occurred today.

While we can learn from history, we know that things are different today. Many 21st century credit union members are very technologically advanced. They rely on online services, automated teller machines (ATMs) and open branches with extended hours.

Social distancing measures and disease containment strategies would be barriers to these typical credit union services. Regulators emphasize that a credit union's disaster preparedness plan must detail how to ensure the availability of cash, continuation of customer service under atypical circumstances and how to communicate with members.

With this in mind, it will be necessary to determine the employees critical to business resumption and maintenance, as well as back-ups for those employees.

The U.S. Department of Homeland Security suggests that businesses refine what they consider "essential" to maintain critical infrastructure and business functions. Resources for assessing the definition of essential are available at www.pandemicflu.gov.

Another issue to address is how employees can work from home. The Financial Services Sector Coordinating Council for Critical Infrastructure Protection and Homeland Security (FSSCC) estimates that 99 % of U.S. financial companies rely on some type of telecommuting in a pandemic influenza. Now is the time to test and evaluate your credit union's telecommuting capabilities, not later.

NetForecast, an internationally recognized engineering consulting company, stated in a January 2007 article that while the Internet will continue to operate in a disaster, bandwidth will be an issue.

NetForecast and federal groups like the U.S. National Communications System (NCS) are encouraging businesses to buy and operate multiple Internet access services from both telephone and cable companies.

In addition to testing the systems, employees must be educated on the telecommuting systems and ensure their homes are set up to access the programs.

Many of the systems require high-speed internet access and training, preparations that need to be made now, rather than later.

Credit unions should coordinate with local and state authorities on disaster preparedness. Communication with police, health and public officials will be critical in a disaster or pandemic influenza. The Financial and Banking Information Infrastructure Committee (FBIIC), of which NASCUS is a member, in conjunction with the Federal Deposit Insurance Corporation (FDIC) is holding outreach meetings across the country to organize regional disaster recovery coalitions.

The coalitions work with state, county and local disaster management agencies to improve the regional process for timely information sharing to better prepare, mitigate, respond to and recover from all hazards that face the region's critical financial services sector. Visit the FDIC's website at www.fdic.gov for a schedule of the outreach meetings, which are open to credit union leadership.

Many resources for disaster and pandemic influenza preparedness are available through NASCUS, the federal government at www.pandemicflu.gov and state and federal credit union regulators.

Disasters, man-made or natural, are certainly not events we can predict. However, we can plan for them and make every effort to protect our employees, families, businesses and the credit union financial services that so many rely on in this country.

Mary Martha Fortney can be reached at marymartha<at>nascus.org. NASCUS is the professional association of state credit union regulators that charter, regulate and supervise the nation's 3,400 state-chartered credit unions. Visit NASCUS at www.nascus.org.