24 MAY / JUNE 2020 FEATURE Dealing With Pandemic Disruption For years banks have had pandemic policies, and have done some level of testing, but never really thought the day would come when it would represent more than another examiner-required policy. Then came COVID-19 and, in a matter of days, our world changed. When we teach in live seminars, we always ask, “How many of you believe that your policies are up to date?” That always gets some hands, but not 100% of attendees. Then we ask, “How many of you believe that your procedures are up to date?” Seldom does anyone raise their hand. These two situations are revealing. Keeping policies current is the easier of the two. But many banks rubber stamp policies that could be much more effective. If it is a Regulation B policy, it usually follows the regulation and indicates that the bank intends to comply. But other policies, notably operations and loan policies, need to do more than restate a regulation. They need to be documents that can be read and used, and a pandemic policy needs to cover a wide range of subjects and issues. Given the situation over the last few months, several of your banks have been thrust into reviewing these types of policies and adding significant language as to how you will address situations such as we have experienced – lobbies closed or restricted, limited staff, staff working from home and the same job to be completed. At a minimum, these policies should address: • How jobs are done in an off-site world; • How electronic solutions are to be used; • Safeguards that must be used to protect customer data; • What types of paper documents can be used “at home” by staff working off site; • Proper disposal and the safekeeping of any documents that are off site; and • Other protections, such as how the computers being used at home are protected from intrusion. With a little brainstorming, we are sure that you can add to this list. Procedures are more difficult to maintain. A consultant from our company was recently in a bank and was examining procedures. Most of the procedures could be summed up as: “Bill takes care of that.” As long as Bill is there, things probably work well. But if Bill is out sick, on vacation or no longer there, how does someone accomplish the task? Procedures are always changing. It is far too easy to tell the three people that need to know about the change and then make a mental note to “update the procedures someday.” That elusive someday often never materializes. We believe that each bank should have a formal procedures review at least annually, and for some areas, maybe more often. For many banks, the inadequate procedure manuals that they have will not offer sufficient information for anyone to complete a task correctly. Many banks have switched to imaging all files. The banks that have made that decision generally are in a little better shape for off-site work, as it is easier to send employees home and still get the work done in a timely manner. If your bank has not made the transition to electronic files, this may be your cue to consider the advantages of this technology. As the world becomes more electronic, and the cost of maintaining offices and buildings continues to increase, this may also be a time to reconsider the locations from which employees work. This may be especially critical if your brick-and-mortar buildings are getting close to capacity. Many tasks, with the right equipment and software, can easily be done from home, saving wear and tear on your building, perhaps reducing occupancy costs, and maybe as a side benefit resulting in happier and more productive employees. We hope that this article helps you examine and address your bank’s pandemic disruption procedures during the current COVID-19 situation. We also encourage you to consider what your situation will be post-crisis, as it will likely have lasting impacts on your bank. Try to assure that the lasting impacts are positive, as we all learn from the experience how to handle future disruptions (should they occur) with even more professionalism. HB Bill Elliot Director of Compliance Education Young & Associates Inc. bille@younginc.com William J. Showalter Senior Consultant Young & Associates Inc. wshowalter@younginc.com Young & Associates Inc. is an associate member of the Indiana Bankers Association.
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