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We know all about power outages at home—make sure you have a flashlight with extra batteries, keep some non-perishable food items on hand, and have a backup plan for charging your phone. But what about power outages at your bank? Are you prepared for the potential consequences of losing power in your financial institution?
In an industry where milliseconds can mean millions, a well-thought-out contingency for power failures can be the difference between a brief hiccup and an operational catastrophe. For bank managers and IT professionals, understanding the nuances of preparing for and executing during a power outage is not just a best practice—it’s a business imperative.
What’s at Risk During a Power Outage?
Whether it’s processing wires, authorizing transactions, or even maintaining face-to-face client engagements, the loss of power can be a multi-faceted disruptor that has far-reaching consequences.
Partial vs. Complete Power Outage
The effects of a partial outage can be just as detrimental as a total loss. Imagine a scenario where one-half of a bank’s operations lose power during a crucial deadline. Without proper planning, this seemingly minor loss can lead to major setbacks, as seen in the missed opportunity involving that vital wire transaction.
Here’s a real-life scenario from one of our clients. Half of the bank’s power went off at 2 pm. They thought it would come back on and since it was close to the end of the workday, not much would be interrupted.
When 4 pm rolled around, the power still wasn’t back on. This bank had to meet a wire deadline that day so they grabbed a laptop that they thought was their disaster recovery backup. But the laptop wasn’t set up! You can imagine their panic when they didn’t meet the wire deadline.
Immediate and Ongoing Implications
Time is money, and nowhere is this more evident than in banking operations. The immediate halt to electronic services is just the beginning. The ongoing implications extend to operational inefficiencies, potential data loss, and most critically, a blow to customer confidence.
What Can Cause a Power Outage at Your Bank?
A variety of factors can cause power outages, including natural disasters such as hurricanes or earthquakes, equipment failures, and even human error. Regardless of the cause, the impact on financial institutions can be severe.
Natural Disasters
Natural disasters like hurricanes and earthquakes pose a significant threat to bank operations. Not only can these events physically damage buildings and equipment, but they can also disrupt power supply for extended periods. In these cases, having a well-defined disaster recovery plan in place is critical.
Equipment Failures
Equipment failures can occur due to age, wear and tear, or inadequate maintenance procedures. When critical equipment like generators or backup servers fail during a power outage, the consequences can be severe. It’s essential to have a regular disaster recovery testing and maintenance schedule in place to minimize the risk of equipment failure during a power outage.
Human Error
While we’d like to think that human error is avoidable, unfortunately, it’s still a significant cause of power outages in banks. Simple mistakes like accidentally unplugging a server or incorrectly entering commands can result in disruptions to operations. Proper training and ongoing education for staff on disaster recovery procedures can help mitigate the risk of human error.
How to Prepare for and Recover From an Outage
Creating a well-structured disaster recovery plan that specifically caters to power outages requires meticulous preparation, prompt escalation procedures, and clear communication strategies.
Planning Ahead
Anticipate the worst to prepare for the best. A well-structured plan must consider both short-term mitigation and long-term recovery, including procuring adequate backup power sources, preparing for staff shortages, and establishing customer communication protocols.
Cross-Training for Flexibility
The bank we mentioned before? They had two branches but nobody at the other branch was trained to carry out this specific wire transfer. They could have counted on their other location to back them up but when it came down to it, their disaster recovery plan failed.
Cross-training employees does more than just prepare them for multiple roles; it equips your bank with a contingency against any structural outage in a specific branch or department. This redundancy in human capital ensures that essential tasks like wire transfers and daily operations can continue even in the face of adversity.
Disaster Recovery Testing and Maintaining Infrastructure
Regular checks and disaster recovery testing should be as routine as balance sheet reconciliations.
The UPS and the Importance of Server Survival
Annual testing of UPS (Uninterruptible Power Supplies) systems and the survival of critical servers can mean an instant failover to backup systems, guaranteeing minimal service disruption.
Generators: The Last Line of Defense
In more severe outages, generators are essential for the long-term continuity of services. Testing that your generators function properly, turn on within an acceptable time frame (they can take anywhere from 1 to 15 minutes to boot up), and maintain the correct output voltage are the key components of your overall power outage strategy.
Service Agreements and Peace of Mind
Entrusting the maintenance of these systems to manufacturers or third-party service providers can be the difference between a generator or UPS functioning efficiently during an emergency or not at all. Regular service agreements ensure that these critical components are in top form when they’re needed most.
Testing and Refining Your Disaster Recovery Plan
Having a plan on paper is only half the battle; executing that plan in real time is where preparation meets performance.
Annual Walkthroughs and Dry Runs
Conducting annual mock drills or ‘tabletop exercises’ with staff can reveal the effectiveness of your plan. This disaster recovery testing can uncover procedural bottlenecks and technical hiccups before they have a chance to become actual issues.
Continuous Improvement and Adaptation
Disaster recovery testing is not a one-and-done event. Your DRP needs to be a fluid and responsive document that adapts to the evolving realities of technology and regulatory oversight. Engage in regular post-exercise debriefings to incorporate new learnings and best practices into your recovery strategy.
Prioritizing Customer Service and Business Continuity
Operations aside, the heart of banking is customer service. Maintaining that service, even in the darkest hours—literally and figuratively—speaks volumes about a bank’s resilience and commitment.
Effective Communication and Transparency
Customers are often more understanding when you have transparent communication. Developing clear, concise communication plans that inform clients of the outage and provide realistic restoration timelines can foster trust and appreciation for your diligence in disaster preparation.
Streamlining Customer-Centric Recovery
Devise a system that ensures essential customer services are restored in a structured manner, prioritizing the needs of existing clients over any new business. Online and alternate banking capabilities can further bolster this prioritization, with a clear pathway for customers to access their accounts and avail basic services online, if physical branches are disrupted.
Use disaster recovery testing to improve your bank’s resilience, evaluate your current plans regularly, and never underestimate the value of preparation in protecting your bank from power outages.
Keep Your Lights On with RESULTS Technology
If you don’t know where to start or you want to complete regular disaster recovery testing with professionals who know the banking industry, give us a call at RESULTS Technology. With our expertise in disaster recovery planning and testing, we can help your bank be better prepared for power outages and other potential disruptions.
Get in touch to see if we’d be a good fit as your business continuity partner.
