Credit unions in Region III have experienced significant disruptions this year because of Hurricanes Harvey, Irma and Maria. Overall, credit unions performed well in providing continued member service in the aftermath of these hurricanes.
As we analyze credit union responses during these disasters, we found several important lessons learned, which include the following:
- Ensure Contingency Funding Plans Are Current and Tested Annually. Section 741.12 (opens new window) of NCUA’s Rules and Regulations states a credit union must have a written contingency funding plan, commensurate with its complexity, risk profile and scope of operations, that lays out strategies for addressing liquidity shortfalls in emergency situations. When a disaster strikes that causes widespread power outages for days or weeks, cash is often the only method of payment available. Therefore, credit unions must ensure they have adequate liquid funds that can be converted to cash readily, and contingency plans for other sources of funds. Also, it is important to secure a back-up cash delivery service in the event the primary cash courier is unavailable.
- Be Familiar with and Prepared to Use the Credit Union’s Back-up Power Generator. Regularly test your back-up power generator and keep it well maintained. Also, ensure you have a back-up fuel supply in case there are supply disruptions. Finally, review your fuel providers’ emergency policies or guarantees at least annually to ensure you will have fuel deliveries in the days and weeks following a major disaster.
- Ensure You Can Begin Processing ACH Transactions Within A Reasonable Time Period. There is a potential for ACH fraud following major weather events due to the vulnerability of institutions in the aftermath. It is important that disaster recovery plans address processing ACH transactions to prevent losses from failing to return erroneous or fraudulent transactions within the prescribed return period. This could include processing ACHs securely through a laptop at an alternative location, or having an arrangement with another credit union to use their facilities and equipment.
- Be Aware of the Availability of NCUA’s Urgent Needs Grants. NCUA has grant funds available through its urgent needs grant initiative. Credit unions that have a low-income designation may apply for up to $7,500 for the cost of repairs or to replace items destroyed during a disaster.
Trim Trees Near Power Lines or Near Your Credit Union. This can reduce the risk of potential power outages or destruction to credit union property from fallen tree limbs.
Additionally, in preparing for and responding to hurricanes, credit unions should follow the best practices outlined in Letter to Credit Unions, 10-CU-10, “2010 Hurricane Season and Ongoing Disaster, Emergency, and Pandemic Preparedness and Planning.” This includes:
- Implementing pre-disaster actions to ensure a constant state of readiness, and take steps to safeguard assets and vital records when early warning is received;
- Communicating disaster preparedness and response efforts before, during, and after the emergency to keep members, volunteers, employees, and regulators fully aware of the situation;
- Utilizing a cross-section of people to develop, test, and implement disaster preparedness and response plans;
- Ensuring back-ups are available not only for data, but also personnel, worksites, equipment, vendors and other resources; and
- Treating disaster preparedness and response plans as living documents that are updated as circumstances change.
Lastly, be sure your staff are personally prepared as well. The website Ready.gov (opens new window), developed by the Department of Homeland Security, provides information on developing an emergency supply kit. The site recommends having your own food, water and other supplies in sufficient quantities to last for at least three days. Because clean drinking water may not be available after a disaster, you should plan to have at least one gallon of drinking water per person, per day. For food, DHS recommends the following:
- Store at least a three-day supply of non-perishable food;
- Choose foods your family will eat;
- Remember any special dietary needs;
- Avoid foods that will make you thirsty; and
- Choose salt-free crackers, whole grain cereals and canned foods with a high liquid content.
Following a disaster, there may be power outages that last for several days—even weeks, as seen in the case of Puerto Rico. In addition to canned food, stock dry mixes and other staples that do not require refrigeration, cooking, water, or special preparation. Be sure to include a manual can opener and eating utensils in your preparedness kit as well. Other needed supplies include:
- Battery-powered or hand crank radio and a National Oceanic and Atmospheric Administration Weather Radio with tone alert and extra batteries for both;
- Flashlight and extra batteries;
- First aid kit;
- Whistle to signal for help;
- Dust masks to help filter contaminated air, and plastic sheeting and duct tape to shelter-in-place;
- Moist towelettes, garbage bags, and plastic ties for personal sanitation; and
- Wrench or pliers to turn off utilities.
These lists are not meant to be all-inclusive. They are, however, a good starting point to improving your own preparedness. The NCUA also maintains a hurricane and disaster information page on its website with more resources on preparedness and staying safe. To learn more, go to our Hurricane and Disaster Information Center.
While major disasters, like hurricanes, can be disruptive, being well prepared can minimize the effects disruptions can have on your credit union and employees.