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Are You Ready For A Disaster?
by: Dana Turner
After a record year of earthquakes, storms, fires and tornadoes, financial institutions are gearing up
People are absolutely fascinated by disasters.
Television mini-series, soap operas, movies, the 10 o'clock news, books, newspapers, tabloids, rubberneckers at the scene of an event- we seem to have an insatiable need to experience a disaster. That is, as long as it's from a safe distance and poses no personal threat.
A disaster always happens to someone else, and may be ugly. However, that disaster is always entertaining.
When a disaster strikes us personally, it's painful.
When a disaster strikes a business, the effects are devastating.
Like most other afflictions, disasters are indiscriminate and often illogical. We all think "this shouldn't be happening," or "there's no reason for this." And we're right, but that doesn't resolve the issue. No one is exempt from a disaster and most people are unprepared if one occurs. We plan for business as usual.
We must now learn to prepare for the unusual.
No Control
Disasters range in type and severity according to environmental conditions and the human factors involved. The truth is, we have very limited control over the disaster itself. We have far greater control over our reactions to the event. Consider putting a disaster management plan in place. You'll sleep better, your employees will benefit from a real team-building experience, you'll save time, energy, resources and lives if a disaster does happen.
Which headline would you like to see on the front page of your local newspapers? A report on page 1 of a disaster that caused a $1 million loss to your financial institution, or one on page 15 reporting the details of how you avoided a $1 million loss?
Image Is Everything
Your institution's ability to attract and retain qualified personnel and customers is directly related to its professional image or reputation. This professional reputation is based upon trust and confidence, and the appearance of safety and soundness developed over time. One of the fastest ways to lose a professional reputation is to be unavailable when your customers need you.
And one of the first resources that a community turns to for help after a disaster is the banker.
Why Do We Need A Disaster Recovery Plan?
Daily worldwide events demonstrate that it is not a matter of if, but rather when, a disaster will significantly affect your institution's operations. A disaster is described as "any event that will significantly affect an institution's operations."
Statistics provided by public service and relief agencies throughout the world indicate that, if a significant disaster strikes a region, perhaps 50% of that region's businesses- including financial institutions-will not be able to re-open. Ever.
Those same statistics suggest that less than 10% of any region's businesses have developed an effective disaster recovery-business resumption plan. If a disaster strikes and your institution ranks with the 90% that are likely to fail because of an inadequate or non-existent plan, you may then cause your customers to fail. It's that simple.
It ALWAYS Happens To Someone Else!
If you think as most people do, you believe that a disaster is really something that happens to someone else. In the following situation, which has been adapted from an actual event, you are the executive on the scene, in charge and with the total responsibility for results. How would you respond to this event without a plan?
Your one-branch institution operates in only one facility, the four-story Main Office. The first floor is occupied by your branch, operations and data processing departments. The second floor is occupied by your administration and loan departments. The third and fourth floors are leased to tenants.
A branch safety-deposit box customer fails to pay the rent on the box and, according to policy, the institution decides to drill the box on a Tuesday morning at 11:00 AM. Inside the box are several plastic baggies containing a white powdery substance.
One of your employees tries to remove one of the baggies for inspection, and rips the corner of the baggie on the sharp edge of the box. The startled employee drops the baggie, showering the ventilated vault with white powder, which is immediately dispersed into the building's central ventilation system.
Both employees within the vault become covered with the powdery substance, and begin convulsing within seconds. In your lobby are employees and customers, including an infant and other people of all ages. Within two minutes these people begin displaying symptoms of intoxication.
There is no real grade for this type of "test", other than pass or fail. If you've never encountered this type of situation, either real or hypothetical, you have no experience or "frame of reference" from which to draw to make effective decisions. You'll fare much better with a plan.
THREE Goals
The three primary goals of disaster recovery and business resumption planning are to:
- Eliminate or reduce the potential for injuries or the loss of human life, damage to facilities, and loss of assets and records. This requires a comprehensive assessment of each department within the institution, to insure that appropriate steps have been taken to:
Minimize disruptions of services to the institution and its customers;
Minimize financial loss;
Provide for a timely resumption of operations in the event of a disaster; and
Reduce or limit exposure to potential liability claims filed against the institution, and its directors, officers and other personnel.
- Immediately invoke emergency provisions of the plan to stabilize the effects of the disaster, allowing for appropriate assessment and the beginning of recovery efforts. You contain the disaster to its least impact and provide for the fastest recovery.
- Implement the procedures contained in the plan according to the type and impact of the disaster. When you implement these procedures, prioritize all recovery efforts by considering:
Employees: Not only must you help to ensure their survival as a basic human concern, but for their performance in helping other persons on the institution's premises when the disaster strikes.
Customers: As you do with employees, help to ensure the survival or care of customers affected by the disaster: physically, mentally, emotionally and financially.
Facilities: After ensuring the safety of employees and customers, secure the facility as shelter for both people and assets.
Assets: Although for the most part recoverable, assets concerns should only be addressed after people and facilities are secure.
Records: As with assets, address the recovery and reconstruction of important records when all people are cared for, facilities secured, and all assets have been audited and stored.
(to be continued next month)
Dana Turner is a partner with Security Education Systems, a research, consulting and training practice.
Dana serves as a project manager and training facilitator in the areas of loss prevention, security and disaster management for financial institutions, private businesses and governmental agencies. His seminars and conferences have received national recognition.
Copyright © 1994 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 5, No. 2, 9/94
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