Commissioner's Corner
By: Judi Stork, Acting Bank Commissioner
I recently read an article written by the Texas Bank Commissioner wherein he asked "have you checked your spare tire lately?" The gist of his comments was that we often drive around thinking our spare is fully inflated and ready to use in case of an emergency. When, in fact, we open the trunk to find the spare has lost air and really doesn't serve its purpose in the time of need. He correlated the spare tire to a bank's business continuity plan and questioned whether such plan would be adequate in an emergency. It's an important question I'd like you to consider.
Have you checked your disaster recovery and business continuity plans to make sure they cover all the areas necessary and are ready to go in time of need? Recent natural disasters such as Hurricanes Rita and Katrina, as well as the events of September 11th, forced many banks to implement these plans. Some parts of the plans worked well; other parts failed. While Kansas may not be subject to a hurricane anytime soon, we do have other natural disasters that could occur along with technological failures, human error, and terrorism that would require your bank to implement your plan.
The evaluation of your risk management processes is key to ensuring adequate continuity plans. Review the structure of your organization and ensure you provide a central point of coordination and responsibility for recovery efforts. Confirm that everyone knows their responsibility and understands how the chain of authority will work. If you are not doing periodic disaster drills, you may want to start. Review your IT function to make sure you have the right technological resources available following the disaster. Provide for adequate backup facilities, for both the relocation of daily operations and for data storage, that are located a safe distance away from the main bank. In the case of the recent hurricanes, many banks found their backup facilities suffering from the same effects as their primary location. Finally, and most importantly, protect the people portion of your plan. The safety and welfare of your employees, customers and their families should be of foremost importance. Your plan should be as specific as possible in this area, because it will be your staff that helps rebuild the bank.
CSBS and the FFIEC have put together a booklet called Lessons Learned from Hurricane Katrina that may be a useful reference when reviewing your existing plans. The booklet is available online at: www.fdic.gov/regulations/resources/lessons/index.html. I would urge you to "kick your spare tire" and check your contingency plans. Banks play such a crucial role in our economy and necessary precautions should be taken to minimize the effects of any disruption.
