Taking Hurricane Lessons to the Bank

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BANKS ON THE Gulf Coast dealt with the disruption wrought by the 2005 hurricanes in different ways. Now they are pooling their experiences on what they did wrong and what they did right. The result is a set of lessons learned by the financial services industry, a collection of comments pulled together by the Federal Financial Institutions Examination Council and the Conference of State Bank Supervisors.

Disaster drills, for example, should “simulate realistic disasters and require the processing of a sufficient volume of all types of transactions to ensure adequate capacity and capability at all recovery sites,” according to a document collecting the lessons learned. That might include having employees practice manual backup procedures, such as using credit tickets, to process transactions while electronic systems are down.

Hurricane Katrina also made some banks structurally unsafe. New Orleans banks responded by renting undamaged buildings, using trailers, or entering into arrangements to share facilities with other banks. It’s a good idea to prepare ahead of time by checking into what types of building inspections and permits are necessary to move into temporary facilities, according to the document.

Other lessons learned cover backup sites, critical infrastructure reliability, replacement supplies, disruptions in communications, and staff ability to get to work sites.