Preparing for the Unexpected

Aug 30, 2019
Jeremy Dalpiaz

By Jeremy Dalpiaz

The Boy Scouts’ simple motto, “Be prepared,” is packed with sound advice. Anyone who’s ever been camping can testify to that. There’s planning, preparation and thoughtful consideration of any number of scenarios to ensure that the campout comes off a success.

But being prepared sometimes extends beyond the day-to-day, which is why September is designated National Preparedness Month. With what seems to be an increasing number of hurricanes, earthquakes, floods and wildfires, most of us know someone who has been affected by natural disasters. In today’s environment, we unfortunately also need to prepare for a host of other potential crises, including cyber events or domestic terror activities. The good news is that community bankers can help lessen the long-term effects of these disasters by implementing a few key measures to help their communities—and their banks—decrease the potential impact.

  1. Offer customer disaster preparedness education to help customers establish backup plans. These tips include small steps like storing digital and paper copies of critical documents; ensuring they have contact information for trustees, guardians, and executors; creating an inventory of personal and household valuables; and contacting FEMA to determine if flood insurance is appropriate.
  2. Have a plan in place to keep banks operational. It’s critical for community bankers to have their own disaster recovery plans at the ready. These plans should explore the day-to-day operational issues associated with the bank, its staff and critical suppliers, and how it will remain up and running in the wake of a national disaster. For example, Sheltered Harbor helps support community banks’ disaster recovery efforts. As a not-for-profit, industry-developed standard, Sheltered Harbor combines secure data vaulting of critical customer account information and a resiliency plan to provide customers timely access to their data and funds in a worst-case scenario. Beyond that program, ICBA also offers a Crisis Response and Preparedness Center to help navigate preparedness issues and establish individual bank plans. FEMA also offers a downloadable tabletop exercise to help community banks walk through the steps to recover from a major hurricane. While the exercise focuses on hurricane preparedness, the tips can be applied to other scenarios as well.
  3. Outline action steps in support of communities. The bank’s national disaster plan should also detail how the bank will support those impacted in the community. OCC guidance encourages banks to contemplate actions like temporarily waiving or reducing ATM, early withdrawal, and late-payment fees for affected customers; working with borrowers who have been affected; expediting lending decisions; and reevaluating the community’s credit needs.

Beyond what can be done financially, community banks also should plan to collaborate with local authorities, emergency relief organizations, business partners, and others in the community, including employees.

While we can’t stop a national disaster from occurring, we can mitigate its impact. As the financial pillars of the community, community banks can reassure customers and the broader community that there’s a clear path forward to rebound from the impact of the disaster. By having the right action plans in place, they will be prepared to do just that.

Jeremy Dalpiaz is vice president of operational risk policy at ICBA.