Financial institutions should devise contingency plans to take effect if key products or services are knocked out by year-2000 computer failures, federal regulators said Wednesday.
For example, to prepare for a possible automated teller machine network failure, a bank might recruit part-time tellers to manage extra branch traffic. Bank directors and senior managers ultimately bear responsibility for their institutions' contingency plans, which will be reviewed as part of each bank's year-2000 readiness exam, regulators said.
"There's no such thing as a fail-safe system, so we all have to plan in case a system fails," said Frank A. Hartigan, project manager for the Federal Deposit Insurance Corp.'s year-2000 initiatives.
The new guidance concerns "business resumption" contingency planning, not to be confused with the "remediation" contingency plan discussed in earlier advisories. A remediation plan focuses on how to fix crucial systems before key dates, such as Jan. 1, 2000. A business resumption plan targets breakdowns on or after key dates that interrupt core business services and product delivery.
Regulators specified four key actions in business resumption contingency planning:
Establish a working group, reporting system, and time line and identify key products and services.
Prioritize services, define year-2000 failure scenarios, and determine minimum acceptable levels of outputs and services.
Develop recovery plans, such as quick fixes, outsourcing, or manual processing; review contracts and insurance coverage; and establish contingency trigger dates and responsibilities.
Obtain an independent review of the plan's feasibility and then test it.
Also Wednesday, regulators advised executives to use toll-free hot lines, seminars, and Web sites to inform customers of the year-2000 issues and how problems could affect bank services.
The banking agencies are intensifying their year-2000 outreach efforts.In June they will begin holding more than 100 conferences nationwide to help banks develop contingency and testing plans. Regulators will hold year-2000 conferences in Dallas, Atlanta, and Chicago for bank service providers and software vendors.