Learning Disaster Planning From A Katrina Veteran

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The flooding that followed Hurricane Katrina's destructive march through Louisiana and Mississippi last August left much of New Orleans under several feet of water. But thanks to a solid disaster plan, Post Office Employees Credit Union was able to resume serving its members just eight days after the storm.

Sidney Parfait, CEO of Post Office Employees CU, shared with attendees of the National Council of Postal Credit Unions annual conference here how his CU was able to reopen so quickly. POECU has five branch locations, ranging from 45 miles north of New Orleans to 50 miles south of the Crescent City. He said the New Orleans branch suffered severe flood damage, but the combination of having a disaster plan, a team effort by the entire staff, and some luck allowed a rapid return to business.

"One week after the storm, there was no electricity for 200 miles. But we were open before any bank or credit union in the area," he said.

With no power, POECU had to return to the days of yesteryear and process all member transactions on slips of paper. Parfait noted that for approximately six weeks after the hurricane, much of the Gulf Coast was operating as a cash economy. That also created a challenge in having enough cash on hand. Parfait said the Federal Reserve of New Orleans was closed, forcing financial institutions to bring in cash from the Federal Reserve of Atlanta.

"We anticipated we might not get a cash delivery for a week or two, so we loaded up with cash the week before the storm," he recalled. "But we didn't realize we wouldn't get a delivery for two months."

With the money supply tight, POECU limited members to $5,000 in withdrawals. Parfait said he was very pleased to report his credit union lost just $15,000 in fraud in the aftermath of the storm.

Lessons Learned

"Credit unions need to review and analyze their disaster recovery plans every few months, and they need to learn from other disasters," he said. "There were things I hadn't thought about because they didn't affect me."

"Plan ahead of time what your credit union is going to do," he added. "Consider all possible disasters that could affect your area. Every area is different. Include plans for terrorists or anthrax attacks."

Just having a plan is not enough, Parfait emphasized. CU management must ensure every employee is trained to respond properly in the event of a disaster. He offered several ways for others to learn from what happened in New Orleans:

Cell phones often don't work after a major disaster. Have a cell phone with an exchange in an area hundreds of miles away-Parfait now has a Dallas cell phone.

Likewise, e-mail doesn't work. Make sure the CU's e-mail provider has a backup server and its own disaster recovery plan.

Have a member communication plan in place ahead of time to make sure the members know how to reach the credit union.

In flood-prone areas, do not put electrical transformers in the basement. After flooding, do not plug in computers and other items before they are completely dry, or there will be fires.

Know how to contact local emergency agencies, such as the police and fire departments, to make arrangements to get back into the area after an evacuation.

Know how to contact NCUA and local regulators, as well as the corporate credit union that serves the area.

"Train the entire staff what the credit union will do in case of emergency," he counseled. "There is no way to plan for everything that happens, but make sure the relationships are solid to insure cash delivery. Form a relationship with a credit union 100 miles away-not too close, because the same disaster could affect both. Have someplace where the affected credit union could hook up an ADP system."

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