Rural Finance Seminar
May 22 – 23, 2008 Dallas, Texas
Topics for Discussion: Aftermath of Katrina and Rita
Initial
Supervisory Issues
Lessons Learned
Regulatory
Building
an Effective BCP
Impact on the Banking Industry
Initially
– almost 300 insured financial institutions impacted
Majority located in LA, MS, AL Impact: Displaced staff and families Destroyed Facilities Disruption to regular business cycles
Regulatory & Industry Response to the 2005 HURRICANES
Community Participation in Initial Response Ongoing impact on the banking industry Development of tools for monitoring financial health of the gulf coast industry Outreach Efforts Long-term prospects
Regulatory
Regulatory & Industry Response to the 2005 HURRICANES
response” teams at Regulatory Agencies Deferral of “protocols” Reporting mechanisms “Inclusive” environment (internal and external)
“Rapid
Hurricane Aftermath Longer-term Issues
to determining financial condition of institutions Ongoing operational issues of financial institutions Data integrity matters
Impediments
Hurricane Aftermath Longer-term Issues
most – two full scope exams now completed Short to midterm – credit quality concerns Longer term – matching business plan to new business climate
For
2005 HURRICANES
Major Challenges for Bankers
Determining
viability of businesses Determining “stable” level of population Staffing concerns Insurance payments / expenses Long-term prospects relative to displaced customers
2005 HURRICANES
Job
Major Challenges for Borrowers & Customers
Losses Cash flow Displacement from homes/businesses Increased insurance premiums “Stabilized” standards of living
What Worked Well???
Cooperation
among bankers, even with competitors, was unprecedented of information between regulatory community, bankers, and industry groups assisted in the drafting of Regulatory guidance, and early stages of recovery process
Sharing
LESSONS LEARNED: Building an Effective BCP
Periodic Plans
testing of plans is crucial
should consider widespread destruction should consider an extended recovery period
Plans
LESSONS LEARNED: Building an Effective BCP
Plans
should consider an extended period of limited communications should consider that critical staff may not be able to reach assigned recovery sites should consider that replacement supplies could be extremely costly/if available
Plans
Plans
LESSONS LEARNED: Building an Effective BCP
Plans
should consider scenarios for both the primary operations center and the backup facility to be inoperable
Plans
should consider that processing of routine transactions can be difficult
should consider the need for maintaining higher levels of cash
Plans
LESSONS LEARNED: Building an Effective BCP
Plans
should consider that the critical infrastructure sectors may have competing interest
Plans
should consider that involvement in local organizations can assist in more timely recovery should consider legal authority to operate from servicers site
Plans
LESSONS LEARNED: Building an Effective BCP
Financial
institutions with well defined plans fared better than those without Board, Senior Management, and Staff involvement integral to successful implementation Plan should employ enterprise-wide approach Plans should consider impact of catastrophe on vendors/outsourced relationships Plans should be UNIQUE!
BCP RESOURCE
Business Continuity Planning Booklet Joint effort of FDIC, FRB, OCC, OTS, NCUA Available on FFIEC website
FFIEC
QUESTIONS
???
M. Anthony Lowe mlowe@fdic.gov 972-761-2030