Disaster Recovery and Preparedness: Does Your Credit Union Have a Plan?

Each day there are news reports of natural or man made disasters that impact hundreds, if not thousands, of lives and businesses in the areas where the event is occurring. Whether it is a headline grabbing event like a hurricane or a localized event such as a flash flood, any event that impacts regular daily activities is something that must be thought about and prepared for by any business, including but not limited to credit unions.  However, disaster preparedness and recovery is not something that people and or businesses like to think about as it is human nature to believe that just because something bad happened somewhere else it will not happen to me.  Unfortunately, credit unions who do not have a contingency plan in place or have not updated or tested their existing plan in many years, are not only risking the integrity of the credit union but are also risking the health, safety and welfare of its employees and members.

Fortunately for credit unions, the National Credit Union Administration (NCUA) treats issues of disaster preparedness very seriously, has made it an integral part of the examination procedure and has dedicated a web page exclusively for such issues. One resource of particular importance for a credit union in developing, updating or testing a disaster recovery plan is NCUA Letter No:  06-CU-12, which sets forth the examination preparedness and response questionnaire.  Specifically, NCUA examiners will apply the "Prepare" test.  This seven point test looks at the following criteria:

Planning-Ensuring Financial Services to Members; Resources-Allocating Sufficient Equipment, Supplies and Facilities; Evaluation-Testing Contingencies for all Critical Systems; People-Maintaining Readiness of Staff and Officials; Alliances-Establishing Relationships with other Organizations; Review-Updating Internal Plans for Effectiveness; Experience-Incorporating Lessons Learned.

Beyond the basics principles of "Prepare", the NCUA also provided credit unions with the AIRES Disaster Preparedness & Response Questionnaire which consists of sixty three (63) questions that a credit union will be evaluated on during an examination. 

While it is important to implement, test and modify existing disaster preparedness plans on a regular basis, another vital aspect of dealing with any unplanned event is ensuring that sufficient plans are in place to safeguard that the disruption is as minimal as possible by having a comprehensive business resumption plan. Again, the NCUA has provided credit unions with guidance such as that set forth in NCUA Letter No:  01-CU-21 and the FFIEC IT Examination Handbook InfoBase for Business Continuity Planning.  Combined, both resources provide a wealth of knowledge, information and suggestions to credit unions necessary to ensure that if a disaster strikes, a credit union can navigate the issues presented to it in the best manner possible based on the nature and severity of the event. 

Disaster recovery and preparedness is not an exciting topic that any individual or business likes to discuss as it often requires consideration of drastic and dire events.  Additionally, as the regulatory burden facing credit unions continues to increase, it is easy to put off developing, updating or testing contingency plans.  Ultimately however, disaster preparedness and recovery goes to the heart of the basic operations of a credit union and without a well thought out plan in place, the survival of the institution along with the safety of the members and staff are a stake.