Prepare Now, Rest Later: Ready Your CU for Disaster

Assess critical business functions, be informed, and test your disaster plan.

May 19, 2011

Today more than ever, natural disasters have the potential for causing a widespread impact on a business due to an immediate loss of physical assets and technological infrastructure.

Our dependency on technology, used primarily to make our jobs easier, can instantly cripple operations and leave credit unions vulnerable to loss and potentially catastrophic results.

With so many dangers and threats, how can a leader take the necessary steps to protect company assets? Preparation.

That involves:

• Asking yourself what can happen inside and outside your credit union to cause you to shut down?

• Assessing your critical business functions. What does it take for you to remain open and server your members?

• Being informed. Local emergency managers can help you identify these critical functions and expose the risks to your organization.

Are you reliant upon any single provider in your supply chain? If so, cultivate a relationship with a back-up supplier should your primary vendor be unreachable following a disaster.

An emergency management plan is the key to your credit union’s survival—and required by law. But it’s not something you can do in a silo.

Involve all staff and employees in the planning process and delineate responsibilities each will undertake should a disaster occur.

Do you have extended contracts in place? Do you have people who can come in and connect generators and have back ups for not only your data but your communications and hardware (computers, printers, servers, phones, etc.)? Include all of this information in the plan.

• Testing your plan. It doesn’t do a bit of good if your plan rests dusty on the shelf unless you practice, practice, practice.

It's a common misconception that your continuity plan can actually fail a test exercise, when in reality the only failed test is the one you don’t perform. A test exercise is a great way to validate the strengths and expose the weaknesses of your plan while providing valuable practice for employees to prepare for a real recovery.

Remind your leadership early and often that a test exercise is meant to find failures now so they become successes during a recovery.

Next: Most businesses unprepared

Most businesses unprepared

Access to data is vital to continue operations in the wake of a disaster. Back up your data through multiple channels and locations—redundancy is important.

However, don’t assume data storage will guarantee immediate resumption of operations. Agility Recovery Solutions recently conducted a survey illustrating that data back-up provides a false sense of security among small and midsized businesses.

According to Agility’s 2009 Disaster Recovery & Business Continuity Survey, 90% of small and midsized businesses are woefully unprepared for an interruption. Most companies have a formal data back-up plan, but only:

  • 28% have access to alternate office space;
  • 41% have access to mobile office space;
  • 54% could acquire replacement office equipment; and
  • 57% have access to power generators.

Ensuring your credit union can survive a disaster often requires most, if not all, of these elements of recovery.

Communicating with your employees, members, and the community in which you operate is crucial leading up to, during, and following a disaster. Outline the tools you’ll use to communicate with employees and their families, such as an alert notification system, texts, and website messages.

During Hurricane Andrew, 200 firefighters under my supervision lost their homes and it sometimes took three days before they knew if their families were alive or dead because we didn’t have a communications plan in place.

I knew I would lose those people should another hurricane hit the area because no one would put their families through that again. Working with the firefighters union, we created an internal communication system and place their families could go to find shelter.

As an employer, you have to do that. Employees must know you care about them and their families.

One of the big failures of businesses I’ve seen is scenarios where employees fail to come to work after a disaster, opting to stay home and care for their families. Business owners and leaders must devise a plan and incentives for employees to come to work—one that helps them understand the company needs them to survive.

Next: Other advice

Other advice

Other suggestions for effective business recovery and continuity:

• Review your insurance coverage. Time after time, businesses assume their insurance coverage protects them from all disasters.

This was a popular assumption following Hurricane Katrina. Businesses and homes suffered significant flood damage only to find out their insurance covered the building structures, but not damage caused by flooding.

• Plan for an alternate location. The Federal government calls it COOP: continuity of operations. Make sure your credit union has access to another building or a contract for back-up space should any of your branch locations become uninhabitable.

Your members rely on your credit union being open, especially during their greatest times of need. If one of your branches is located in a low-lying area and gets flooded, where will move to? Will your members be able to conveniently access your new location?

You either need a building you can move into or have a vendor provide you with office space.

Preparing for a disaster can be an overwhelming experience even for large financial institutions focused specifically on the recovery needs of the company. Obtaining contracts for power generators, office equipment, information technology infrastructure, and satellite bandwidth to ensure communications can be a large and frustrating undertaking for small and midsized credit unions.

In fact, I’ve seen a lot of business owners steer away from disaster planning for this specific reason. Many credit union leaders lack the experience and time to develop their plans effectively and, therefore, should seek out a reputable business continuity solution provider to handle these needs.

One such provider is Agility Recovery Solutions. It can provide the four key elements of recovery—power, space, connectivity, and satellite—to credit unions for a nominal monthly fee. Over the past two years, Agility has responded to more than 560 disaster events and conducted more than 700 recovery tests across North America.

Being able to serve your members after a disaster depends on preparedness planning done today. Credit unions spend a lot of time, money, and energy to make their companies successful, yet sometimes little attention is paid to real disaster planning—a critical omission that could result in the demise of your credit union.

Taking the time to prepare now could be the difference in opening or closing your doors in the future.

David Paulison served as administrator of the Federal Emergency Management Agency from 2005 to 2009 following a 30-year career in emergency management and emergency service.