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Disaster Preparedness:Is Your Plan Ready for the Real Thing?

August 2006

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Presenter – Steve HerndonBank of America

Steve HerndonSenior Vice PresidentGlobal Government Banking ExecutiveBank of America Mr. Herndon’s group is responsible for all services provided

to the US Government and International Governments globally. He also has oversight for the enterprise view of state and large municipalities.

Bank of America acts as a financial agent to the US Treasury and other government agencies, providing collection, treasury and disbursement services under the Plastic Card Network, Electronic Federal Tax Payment Systems (EFTPS), IRS Lockbox, General Lockbox, Bankruptcy Trustees, US Courts, and numerous depository relationships under Treasury General Agency contracts

During 28 years with Bank of America, has held a variety of management positions in areas such as Operations, Product Development and Client Management with the last 13 years focused solely on Government Banking.

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Welcome and agenda

Key stepsUnderstand the key steps in developing a disaster recovery/business continuity plan

Critical treasury functionsLearn what critical treasury functions should be under your microscope

Best practicesHear best practices and lessons learned in the areas of Payroll, Payables, and Receivables

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What is a disaster? What is disaster recovery?

An event that disrupts an organization’s ability to function for an extended period of time

Disaster Recovery and Business ContinuityRefers to an organization’s ability to recover from a disaster and/or unexpected event and resume and continue operations

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Crisis Readiness Across the United States

56%

20%

30%

Created or updated an Evacuation Plan In the past year

Prepared for a pandemic outbreaksuch as bird flu

Received sufficient federal resourcesfor first-responder communications

Crisis Readiness% of cities surveyed that said they have:

• A survey of 183 cities (from Bothell WA to New York NY) paints a grim picture of the nations disaster preparedness nearly 5 years post 911 attacks.

• Most cities have not received enough money to get police & firefighters the radios/equipment needed to communicate in the event of a crisis.

• More than 4 in 10 cities have not created or updated evacuation plans since last fall’s Gulf Coast hurricanes.

• FEMA is still getting mixed reviews on how much confidence US cities have in their abilities post-Katrina.

* source: USA Today July 26, 2006 print edition

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Steps in developing a disaster plan

Know your risks Mitigate as many risk exposures as you can Identify key activities you need to plan for Pick the best recovery solution that you can afford Develop and document plan Test your plan and document issues/lesson learned Update your plan and keep it current Repeat process at least annually And keep raising the bar!

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Here’s what you told us

How prepared is your organization to conduct basic business and financial functions in the event of a disaster striking your community?

15%

30%

34%

8%13%

Very well preparedFairly well preparedMarginally preparedNot preparedNot Sure

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What are the risks? A U.S. example

Flooding

Chicago 4/92Bombing WTC

NYC 2/93, 9/01

Hurricane IsabelEast Coast 10/03

2005 Hurricanes: Katrina, Ophelia, Rita, Wilma, ???

FloodingGeorgia 7/94

Power Failure, 12/98San Francisco

RiotsLA 5/92

EarthquakeLos Angeles 1/94

FloodingMidwest 1993

Hurricane InikiHawaii 10/92

BlizzardEast Coast 3/93 & 1/ 00

Rain/Mud SlidesCalifornia 3/95

WTO Riots 11/00Earthquake 2/01Seattle

Power OutageNY 8/90, 8/03

FloodingSouth TX 10/94,Houston 7/01

BombingOklahoma City 4/95

Hurricane OpalFL, GA, AL, NC 9/95Tornado

Nashville 4/98Fires in New Mexico5/00

Hurricane FloydEast Coast 9/99

Wild Fires in N. California9/05

Snow/Ice StormMD, NC, VA 01/04

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Pandemic preparation

Plan for the impact on your organization on your employees and customers

Establish policies to be implemented Allocate resources to protect your employees and

customers Communicate to and educate your employees Coordinate with external organizations and help your

community www.pandemicflu.gov

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What are the critical activities/issues?

Communication System and Application Recovery Information Reporting Logistics Payroll, Payables, Receivables and Funding Personnel

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Communication, System Recovery and Information Reporting

Communication is KEY Eliminates duplication of objectives/efforts Have policy/procedures clearly outlined and disseminated prior to disaster Keep prime business partners informed; have plans and administrative

scheduling out front so customers and other state agencies know what to expect

Ensure you have alternate communication methods 800 MHz (2-way radio), two forms of Internet connection, car charger

for cell phones, satellite phones as backup

System and Application Recovery

Information reporting Don’t use an alternate site in your geographic location as your ONLY

option for disaster recovery (in the event the remote site is inoperable or without resources)

Keep computers/servers with you and transport if necessary Ensure all passwords and 800 numbers on hand Conduct testing of alternate site and calling trees regularly

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Documentation & Logistics

Document as you go – you will not be able to recall every detail later

Address documented issues as soon as feasibleConduct post-mortems on tests and areas where the disaster recovery plan was used only partially to address what needs to be updated/changed

Make sure your plan addresses backup transportation needs for key personnel

Empower the right people to make decisions (i.e., getting payroll distributed early, keeping phone lines open, providing backup administrative support)

This ensures your disaster recovery plan continues to function if an unidentified scenario arises – keeps associates moving versus waiting for an answer

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Payroll, Payables and Receivables

Payroll Payroll policies Direct deposit and card Pre-date ACH payroll run, distribute checks early

Cross-train employees Remote payroll Use Internet

ReceivablesWeb-based invoicing/paymentsUse lockboxMerchant Services

Payables Electronic Payments Remote processing Wire transfer Positive Pay

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Personnel

Personnel Employee notification

Icon on Website, 800 number, news media for notices/announcements, phone tree for check-in, preplanned meeting after disaster

Establish policy related to leave for affected employees

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Federal Emergency Management Agency http://www.fema.gov/

U.S. Department of Homeland Security http://www.ready.gov/

Department of Health & Human Services (Pandemic Flu information) http://www.pandemicflu.gov/

American Red Cross http://redcross.org/

Disaster Recovery Journal http://www.drj.com/

Resources

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Top points to remember Know your risks Identify key activities Have a plan Test the plan Update the plan continuously Utilize technology to become more “Disaster Resistant”

Key considerations

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