Banks Prepare for Disasters; You Should Too
by Weiss Ratings | September 9, 2011
None of us expected the terror attacks of September 11, 2001. And we hope that we never experience anything like it again. But as we watch the news, we’re reminded that unexpected terror attacks and other disasters are quite possible — even in our backyard.
When you think about the possibilities that could come with a disaster, you probably don’t give much thought to your bank or your own financial plan. But you should ...
Banks play a vital role in supporting the economy, businesses and families so they need to be prepared if disaster strikes. And in fact, federal and state banking regulators require financial institutions to develop and test “disaster recovery” and “business continuity plans.”
According to the Federal Deposit Insurance Corporation (FDIC), each plan must spell out how the bank will recover data, ensure the availability of cash, continue customer service and function effectively after a disaster.
The FDIC expects banks to plan for wide-ranging disasters where personnel are unavailable, key facilities are closed and power and telephones are out for an extended period.
Michael Jackson, an Associate Director of the FDIC’s Division of Supervision and Consumer Protection noted,
“The terrorist attacks on September 11, 2001, and the devastation from Hurricanes Katarina and Rita reminded the financial industry and its regulators that you must be ready for a disaster of any magnitude or duration — you cannot plan for something small or brief.”
As we approach September 11, we remember those lost in 2001. And we give special recognition to heroes of that disaster. It is a sad reminder that we are not immune to acts of terror and other possible disasters.
Knowing your bank is preparing to do its best to continue to conduct day-to-day business, even under the most difficult circumstances, gives a measure of comfort that most things will return to some semblance of normal after the world is turned upside down.
So, the banks are gonna be okay. But how about you?
Naturally, your first concerns in a disaster should be for the safety and security of your family and friends. Then you’ll think about your property. And only then, will you start to think about your financial well being.
And even though it’s last on the list, your ability to conduct essential financial transactions will be vitally important for your personal recovery. “Being prepared to function financially if you have to leave your home at a moment’s notice will give you less to worry about if an unfortunate event happens to you,” said Janet Kincaid, FDIC Senior Consumer Affairs Officer.
Are you prepared if you had only a few moments to evacuate your home — and were away for days or weeks? Would you be able to conduct your financial life?
Here Are Some Things You Might Need ...
Just in Case!
You should organize and keep the following documents and other items in a secure place, readily available if you should ever need them at a moment’s notice ...
Forms of Identification
Documents such as your driver’s license or state ID, insurance cards, Social Security card, passport, and birth certificates will be crucial if you or your family need records to prove to a government agency, a bank, insurance company or other business that you are who you say you are. Keep originals and copies in separate, safe places.
Checkbook
Even if you rarely write checks, having a copy of a check and your account number handy can be helpful in an emergency. If you have the right information, you can authorize payments over the phone if you need to.
ATM and Credit Cards
Your cards will give you access to cash and give you the ability to pay bills. Make sure you know the personal identification numbers (PINs). But, don’t write them down or keep them with your cards in case they are lost or stolen.
Cash
Since it’s quite possible power outages or other hazards will affect ATMs and credit card use, it’ll be important to have cash on hand. The amount you should have is difficult to determine. But consider the number of people in your family and the possibility that power may be out for an extended period. Keep your cash in a safe place since it can be easily lost or stolen.
Phone Numbers
Besides important family contacts, you should keep numbers for your bank, credit card companies, brokerage firms and insurance companies. You may need to contact them to make a payment, replace cards or documents, or for other assistance. If you deal with specific people on a regular basis, keep their phone numbers too – working with someone you know can make the difference if you are missing important identification documents.
Account Numbers
Keep your bank, brokerage, credit card, homeowner’s and auto insurance policy numbers in a safe place. Again, keep the copies in a safe place, separate from the originals. If you have a copy of your credit card and ID, you may be able to make a purchase without having the actual card.
Safe Deposit Box Key
The bank won’t let you into the safe deposit box without the key, no matter what form of ID you have.
So, make sure you have your key in a place you’ll be able to get to.
Where Should You Keep This Stuff?
You’ll want to keep documents where they will be protected, but you’ll also want to be able to get to them in an emergency.
Document Copies
Keep copies for yourself, but also consider giving copies to trusted family or friends. Or let them know where to find these records in an emergency. Paper copies are good and so are electronic disks or flash drives that are easy to store.
Home or Bank Safety Deposit Box
Safety deposit boxes are good for papers that will be hard to replace, but not for things you might need to get quickly. Original birth certificates, mortgages and contracts can be kept at the bank. But your passport and health-care directives could be needed on short notice.
Waterproof It
Whether the documents are at home or at the bank, seal them in airtight and waterproof plastic bags or containers. It’s important to know that safe deposit boxes are water resistant, but not waterproof.
Be Ready to Evacuate
Your evacuation kit should include first aid items, prescription medicine for at least a week, flashlights and other survival items. You should also keep essential financial items such as cash, checks, copies of credit and ID cards, a key to your safe deposit box and contact information. You’ll want to review these every now and again to keep things up to date.
Evacuation bags should be waterproof and easy to carry. Keep the bags in a secure place at home, somewhere a thief is not likely to be able to carry it away.
Other Things to Consider
Direct Deposit
Having paychecks and payments automatically hit your account will help if you can’t get to the bank or mail delivery is delayed. While your bank may not be able to process even direct deposits in a disaster, the problem should be fixed in a reasonable timeframe.
Automatic Bill Pay
Setting up automatic bill payments from your bank account can help you avoid late charges and reduce your reliance on mail delivery.
Internet Banking
Consider signing up to access your accounts through the internet. This could make it possible for you to bank from wherever you are staying during an emergency.
Review Insurance Coverage
Of course you’ll want to check your insurance coverage on a regular basis to make sure you will be covered for the cost to replace or repair your home, car and other valuables.
And don’t assume you’re insurer will be able to cover your claims — make sure — check Weiss Ratings to monitor the financial strength of your insurer. Check now and check it again, and again. You won’t want to be stressing out about the safety of your insurer in the midst of an emergency. And you won’t want any surprises when you call your insurer for help after a disaster.
As always, be prepared and stay safe.
About Weiss Ratings
Weiss Ratings is the nation’s leading independent provider of bank, credit union and insurance company financial strength ratings, accepting no payments for its ratings from rated institutions. Weiss Ratings also provides debt ratings on 49 sovereign nations.
By adhering to its independent business model, Weiss outperformed Standard and Poor’s, Moody’s, A.M. Best and Duff & Phelps (now Fitch) in warning of future life and health insurance company failures, according to a 1994 study by the U.S. Government Accountability Office (GAO). Similarly, Weiss was the only one to identify, in advance, nearly all major banks that failed or required a federal bailout in the 2008 debt crisis.