Y2K Contingency Planning

What Else Can Go Wrong?
Much of Y2K readiness is not within your control. There are potential problems with utilities and services such as electricity, telephones, heat, and transportation. These are not within your control and no amount of Y2K efforts on the part of the bank can prevent these problems. Your only option is to have a contingency plan for them if they occur.

Contingency planning for Y2K should not be fundamentally different from any disaster recovery planning process. However, it is highly visible because of the press attention and related public concerns. So it is a good idea to have a Y2K contingency plan for general and special disaster recovery issues in January 2000.

To develop a contingency plan, first think through what you can and cannot do without these utilities and services. For example, without electricity, you can't run computer programs, much less compliance software. Your tellers won't be on-line, and your electronically controlled doors won't work. For compliance, you will need hand-held tools with fresh batteries.

If the phones are down, you have additional problems. Without phone lines, you can't get on the Internet to access resources. So if you are using an online service for OFAC compliance, you had better print out the list in late December.

Other business activities that will be limited if the phones are down include ordering credit reports or flood hazard certifications, communicating with customers, and communicating between branches. Branch communications may be particularly important for catching and preventing fraud. You will need back-up plans for processing applications and for branch communications.

What if the heat goes off? Without heat, you can't keep staff and customers warm. But you may also be unable to run computers and other sensitive equipment.

And, of course, there are payment systems. Other payment systems and transportation methods may fail and cause you problems. Your contingency plan should review your check presentation procedures and identify alternatives. Give attention to cash management procedures and wire systems. Consider using a courier service - or prepare your own.

No one can think of everything - especially when it involves something that has never happened before. The best way to include what you should is to involve as many people as possible. Ask staff to monitor themselves to identify Y2K problems. Ask them to notice everything they do that runs on electricity. Notice every activity and service that involves phone lines. Make a list of Internet uses and needs. Then pull these lists together to develop your contingency planning list. Below are some examples of contingency planning steps to take.

Remember "the only thing we have to fear is fear itself"? That may be the most important piece of your Y2K contingency plan. The worst thing that can happen is that customers take precipitate actions because of fears. In short, the computer world may make the transition smoothly but the customers can cause a disaster.

One step to include in your Y2K plan might be special customer services designed to show confidence in the bank. For example, plan to have refreshments in the bank lobby on your first open week in 2000. This would bring customers in and also show the bank's confidence in Y2K readiness.

Y2K CONTINGENCY PLANNING ACTION STEPS

Compliance disclosures may be a problem. Get several people up to speed on the hand held calculation tools.
You may need the tellers and others to be ready to use old fashioned (not electric powered) adding machines. Find and dust off any ancient equipment you still have. It may be useful for a few weeks.
Stock up on all types of batteries that might be needed to run hand-held tools.
Have a modest stock of blank forms, including compliance disclosure forms, for hand preparation. Make sure several people know how to fill them out by hand - correctly.
Arrange back-up systems for communicating with vendors. If your phone system or the phone lines don't work, you will need alternative ways to reach the vendors.
Pre-print consumer loan and deposit disclosures before the end of December so that you can give customers the early disclosures required when they ask to apply for a loan or to open an account.
Download anything you use on the Internet. For example, download the OFAC list in late December.
Close out end-of-year statements and accountings before the end of December. This should include escrow statements, tax information, and similar annual or quarterly statements.
Consider moving up the dates that you will close postings and mail statements to customers. Get as much out as you can before the end of 1999.
Schedule loan closings to avoid the first week of January 2000.
Plan a back-up communication system between branches.
Think about getting a generator.
December is going to be a busy month. Think of ways to motivate and reward staff.