The Invisible Hurricane

Register now

Dramatic footage from Hurricanes Charley, Frances and Ivan show flattened buildings and incredible wreckage. But for credit unions it's what seethes below the surface in the ensuring weeks, months and even years that creates what one expert calls the "double disaster."

"When people think of hurricanes, they think of roofs being torn off buildings and total devastation, but most credit unions don't tend to suffer total losses like that-it's usually more often their members' and employees' homes that sustain severe damage. So the real issue for credit unions in recovery mode is power and communications," said Mike Retelle, claims manager at CUNA Mutual Group. "Yes, you have issues of physical damage, but that's a known quantity. We can get physical damage fixed. But everything comes back to one thing, and it is the biggest issue of all: stress. It really becomes a double disaster."

One big stress-driver: the divided loyalties that each employee has during a catastrophe between personal and professional lives.

"You've got a CEO who is trying to deal with water damage and lost shingles at the credit union, but that CEO is also trying to deal with damage at his own home at the same time, and you've got board members asking 'When are we going to get the monthly statements out?' because during all of this, the business of the credit union continues, even as some employees are trying to live out of hotels, or their cars," Retelle related. "We have to be careful about placing too much internal pressure on these people."

While initial recovery efforts may start with physical damage and clean-up, things like loss of power, communications and sanitation can go on for days and weeks at a time. But often there are even bigger losses are yet to come.

"What typically happens in a really major disaster is the manager gets the credit union through the event. Usually they do a phenomenal job of getting the credit union back up and running to serve the members, but a year or two down the road, they leave," he explained. "And that's the real double disaster-the loss of leadership. They get the credit union through the disaster, but they don't want to stay with the credit unions. For that matter, you have staff that doesn't ever want to return to the credit union. In a major disaster, it's not uncommon for the CEO to be gone in two years, and in many cases their replacement is gone, too. The internal pressure put on these people by the board-and by themselves-is huge."

Indeed, a CU CEO's worst enemy is often herself. Retelle recounted the situation of one credit union executive who, following a natural disaster, was pretty much living at the credit union. Her own home had sustained serious damage, more serious than the credit union, but she made getting the credit union up and running her priority. "I kept telling her, 'please go home, take care of yourself or you will be no good to the credit union down the road,'" Retelle said. "But she kept saying, 'No, my home will wait.' I can't make her go home."

Disaster planning, then, isn't simply about acquiring a generator and having the gas to power it, it's about delegating authority.

"We urge managers to spread out the responsibilities. Someone can be in charge of the generator, someone else deals with the insurance company, someone else deals with the power company...it can't all be one, or even just two or three people, or you'll burn them right out," he urged. "But the problem is, let's say you've got three people you've spread the responsibility among. Then after the storm, you try to contact the other two and can't find them. You're not going to wait for them, you are going to take it upon yourself to get the credit union up and running. It all comes back to stress."

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER