Veterans of One Disaster Share Lessons Learned

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MOSS POINT, Miss.-It's been nearly six years since Hurricane Katrina devastated the Gulf states, and many credit unions in the region say they have put into practice some of the valuable lessons learned in the immediate and longer-term wake of the storm.

As the 2011 hurricane season kicks off, these are lessons they say other credit unions, including those looking to recover from or plan for tornadoes, could benefit from.

James B. Smith, CEO at Singing River FCU here, wasn't shy with his suggestions: "Make sure you've got flood insurance," he said. "We were not in a flood zone area when Katrina came through and we didn't have flood insurance."

Singing River ended up with 18-inches of water in its main office-the same facility that only two weeks earlier had hosted a grand re-opening ceremony after doubling its square-footage...and wasn't in a flood zone.

While the building reopened the next day, the CU took a number of actionable steps to decrease the potential for similar problems in the future. In addition to installing a satellite back-up for the core processing system, "we purchased two dozen large plastic containers with lids, and any loan files that are three feet from the ground and below, we pull those out" and store them in the containers, which are kept on the building's second floor.

The lessons learned at Singing River echo those heard from others that have been through hurricanes and other disasters. "I think everybody got prepared after Hurricane Katrina for something of that magnitude again," said Charles Elliott, Jr., CEO of the Mississippi CU Association. "It's our hope and prayer that that never happens, but I think we're prepared for another Katrina."

That level of preparation, said Elliott, begins not just with having a disaster-recovery plan, but with testing it regularly. "Credit unions put these systems in place but don't test them to ensure that they're going to work the way they're designed," observed Elliott.

While NCUA has its own disaster-preparation requirements, many of the state leagues Credit Union Journal spoke to said there is much more to be done beyond just what's included in a regulator's rules.

"A lot of [preparation] is about redundancy," said Elliott. As an example, he cited the numerous credit unions that had planned to rely on cell phones after Katrina, but found themselves out of luck when the few functioning cell phone towers didn't have generators or fuel to run those generators. Similarly, "you assume you'll be able to get gasoline, but there's no electricity, so none of the gas pumps work. So you need to have other systems in place. You think you have everything worked out, but you can't be reliant on one solution to solve an issue like communications or fuel. You've got to have multiple systems in place to deal with the possibilities."

Pat Mason, CEO at Sun CU in Hollywood, Fla., noted that preparation "starts with your building itself and your communications. We are ahead of the game now, because of communications and our core systems," most of which will allow Sun CU to conduct business anywhere there's a working Internet connection.

Chief among communications concerns is making sure all staff stay informed, which is why the League of Southeastern Credit Unions-which serves both Alabama and Florida-utilizes a disaster hotline. "Credit unions can access the hotline and get information out so that staff can call in and get the most up-to-date information," said Mike Bridges, VP of marketing and communications.

Many also noted the importance of knowing the credit union's vendor contracts so that operations can be restored as quickly as possible.

That type of centralized system can be especially important if a CU will be utilizing a back-up location or shared branching, which many called the best disaster recovery plan there is.

With storms carrying the potential for long-term power failures, "one way to prepare is to make sure you have extra cash, because if a hurricane hits, many stores won't be able to take a credit card or a debit card," said Jean Couchois, compliance and risk-management VP at the North Carolina CU Network. "Cash is the biggest concern that you have to have in a disaster, because your members are going to need cash in a disaster. Yeah, they need a lot of other things, but they need to be able to go to the store to buy their water."

It's also important to make sure that members understand "alternative ways to access their funds, whether that be plastics, utilizing home banking or phone services, as well as educating them on those other ATM networks that we're part of where they can make deposits and withdrawals," reminded Bob Harrington, business continuity and disaster recovery manager at VyStar CU in Jacksonville, Fla.

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