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Special Report

Anyone can be the victim of a flooded safe deposit vault. Believe it or not, defective plumbing, not natural disasters, accounts for more than 50% of flooded vaults nationwide.

No one is immune to vault flooding and its devastating effects. Does your financial institution have a written Safe Deposit - Disaster Recovery Plan in place, which specifically details procedures for a fast, effective response to a flood? Hurricane Katrina proved yet again that little or no preparedness before an event leads to panic and chaos, thus exacerbating the dreadful consequences that follow. It is incumbent upon a financial institution to have a plan which facilitates a safe, efficient, and effective recovery effort for both itself and the box renters it serves.

Frantic Calls
After Hurricane Katrina, calls came in from financial institutions along the Gulf Coast, asking for advice and guidance concerning the reclamation of boxes that were totally under water. We advised them to first: protect the health and welfare of those who would be involved in this safe deposit box reclamation; and second: address the fears, concerns, and frustrations of their renters who, understandably, would be demanding immediate access to their valuables.

Most box renters are oblivious to the levels of contamination present in floodwaters. Your box renters must be made aware of these dangers and then given assurance that your institution is doing everything possible to protect and reclaim their boxes and, at the same time, protect all recovery workers and box renters alike from contact with harmful pollutants. You must tell these renters to "Be Patient." With circumstances this dire, there is no "quick fix".

Flood Water and Contamination
One security officer shared a frightening experience that underscores the contamination threat. Ten employees wearing protective breathing masks and rubber gloves were sent into a flood-stricken vault to retrieve a significant cash reserve. Twenty-four hours later, four of them were rushed to the hospital suffering from respiratory distress. X-rays revealed black spots on the employee's lungs.

Recent government test results released by the EPA and the Center for Disease Control indicated that flood waters in New Orleans contain bacteria associated with sewer water, sludge, and petrol-chemical toxins at ten times the accepted levels, and levels of E.coli bacteria were one million times greater than levels found in chlorinated water according to a Rice University study.These troubling statistics indicate a contamination situation so serious that relocation of safe deposit boxes to a safer remote area may be necessary.

Actions Needed Before and After a Flooded Vault
The following information responds to the top ten questions with condensed explanations of procedures that should be followed. For more detailed and expanded procedures, a complimentary "Flooded Vault - Disaster Recovery Package" is now available.

Q. What should be done before a flood?
A. Research evacuation routes, purchase a weather band radio with extra batteries, secure the vault and take steps to prevent water from entering this area. Train all personnel to avoid using terms such as "waterproof" or "hurricane-proof" when describing your safe deposit services.

Q. What types of legal assistance and documents should be obtained?
A. Contact your attorney, insurance agent and security company to prepare legal affidavits; review current insurance coverage; and provide adequate vault and facility security. Caution all personnel to be very careful when answering a renter's legal, insurance and security questions.

Q. After floodwaters recede, what should be done?
A. Health and legal concerns must be addressed immediately before anyone is allowed inside the flooded vault area. For insurance purposes, make a film or video record of all the damaged areas before anything is cleaned or removed. All trash removal, restoration, cleaning and other service companies should be contacted immediately.

Q. How can my financial institution obtain public assistance?
A. Contact all federal, state, and local assistance organizations to find out what help is available in the flood recovery effort. Ask local hospitals and public health organizations for suggestions for cleaning and decontaminating flooded vault areas. Secure safety inspections from structural engineers, city building inspectors and public health officials before allowing vault access.

Q. What methods can be used to notify renters of the flooded vault status?
A. Renter notification can be given by letter, phone, Internet web sites, TV, radio, newspaper, or other news media. Your disaster recovery plan should contain various sample notification letters to handle box relocations and termination of the renter's contract (1st and final notices). These letters and notices should be carefully worded and must be reviewed and approved by your legal counsel and insurance company.

Q. When should a remote location be selected?
A. If box sections and renter's contents are seriously contaminated, they should be removed from the flooded vault area. If possible, a carefully worded notification letter or notice should be provided to each box renter prior to relocating these boxes or terminating the contracts. Contact other financial institutions in your area to see if they have boxes available for these displaced renters and offer to pay the first year's box rent.

Q. How is a proper inventory and box surrender form created?
A. If renters come in to remove contents or you must drill these boxes to terminate the contracts, a properly worded legal document must be developed and approved by your legal counsel. This form should be completed under dual control, signed, notarized and retained as part of your chain of custody documentation.

Q. Should my institution assist with content replacement?
A. Your efforts to provide all flooded box victims with resources for replacing or drying out their box contents will go a long way toward restoring the good will of these box renters. Information on "drying out" box contents and replacing stocks, bonds, court documents and other legal papers will be needed. Providing local resources for cleaning jewelry, watches, coins and other valuables will also be well received and appreciated.

Q. What should be done before granting vault access?
A. After the disaster strikes, be prepared for an onslaught of extremely concerned box renters. Most of them will be very upset and in a big hurry. Good public relations, adequate communications, and immediate renter notification will be extremely important for damage control.

Q. When should vault access be permitted?
A. Renters should be granted SAFE access as soon as possible, by appointment only. After contacting these renters, accurate documentation records must be maintained. If renters do not respond, rental leases must be terminated and these boxes drilled. Proper notification, dual control, box content inventories and adequate safekeeping of removed box contents must be maintained.

If your Disaster Recovery Plan is not in writing, you MUST do this NOW, before another KATRINA or a plumbing disaster! Taking precautions, developing your internal plan, training your employees and testing your security procedures will minimize your potential liability during a flooded vault situation. If you need assistance in developing a workable vault disaster plan or you would like to receive a complimentary "Flooded Vault - Disaster Recovery Package", call (713) 937-9929 or email your fax number to

About the Author: David P. McGuinn, President of Safe Deposit Specialists in Houston, TX, is a former banker and is often referred to nationwide as the safe deposit GURU. In all 50 states he has trained over 200,000 safe deposit personnel since 1969. He has created numerous safe deposit manuals, training videos, and security and compliance products, including a valuable "Flooded Vault - Disaster Recovery Manual". During the past 36 years, McGuinn's safe deposit products and seminars have been recognized as the national standard for the financial industry.

Copyright © 2005 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 15, No. 10, 10/05

First published on 10/01/2005

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