5 Business Continuity Lessons As Taught by Katrina
Sudden disaster strikes your bank and you lose all electricity, communications and contact with your own employees. What steps do you take to assure that business can continue?
Here are 5 business continuity lessons shared by Parish National Bank in greater New Orleans as it struggled to rebound from Hurricane Katrina:
1. Keep three phone numbers for all key employees and large corporate customers. These should include land line, cell phone and a number from outside the area, perhaps a friend or family member of the contact.
2. Have a satellite phone at your data center. After Parish National cash management manager Angela Hood was unable to use land lines or her cell phone, she found a satellite phone that provided communication in and out of the data center.
3. Have a contingency plan that covers all anticipated problems -- and practice it ahead of time. Cross-train all employees so they can take over one another's jobs.
4. Maintain constant communication with the Federal Reserve, which can work with you to get the data files you need.
5. Keep in contact with your large corporate customers to understand what problems they are experiencing and any needs they may have.
After Katrina and the flood struck, some of its 16 branches were under water and none had power. The timing couldn't have been worse. The hurricane hit August 29 and just three days before the end of the month, when large corporate customers need to make ACH transfers to pay employees -- money desperately needed by people fleeing the city.
But Parish National implemented an ambitious disaster recovery program and was able to keep its data center running. Critical files were saved but communication remained a huge problem, since land lines and cell phones were dead.
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By securing some generators, Parish National was able to open four branches three days after the storm, although those offices still had limited communication.
A top priority was getting payroll out for corporate clients. Hood drove to Baton Rouge where she worked with the First National Banker's Bank, which gave Parish National access to its computer area. Hood was able to access ACH files from the Federal Reserve and move funds from corporate to customer accounts via the use of floppy disks. "We had customers who needed those funds desperately," Hood says.
For several days, Hood made daily drives in heavy traffic to Baton Rouge to move data around from the disks. Wire transfers had to be faxed to the banker's bank, printed out and then re-keyed by hand at Parish National's Data Center.
Getting customers their Social Security checks was another significant challenge as the payments were expected Sept. 5. Hood says ACH transfers were the most reliable way to get the funds to recipients, but in some cases checks were left at branch offices for pick up.
While Parish National's ATM network connection was operational, most of the ATMs in the area were shut down due to power outages. The bank increased by 50% the credit lines on all of its customers' credit cards to help them get through the emergency, and it dropped all foreign ATM fees to enable customers to gain access to cash from ATMs near where they had been relocated.
Additional assistance was obtained from other banks as Mid-South Bank agreed to cash checks for Parish National customers and even accepted some deposits. By Sept. 19-three weeks after the hurricane hit-all of the banks' branches, except its French Quarter branch, were open.
For more on business continuity and disaster recovery planning, see "How to Protect the Data?", an article from the September/October 2005 issue of BAI Banking Strategies, online in its entirety.
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