Review, prepare and implement.
That's what the NCUA advises credit unions to do as they begin the process of preparing for the hurricane season. It favors an optimistic, yet realistic, approach.
"While we always hope for the best, it is prudent that we plan for the worst to ensure our preparedness," the agency said in a policy summary.
To begin with, the agency urges each credit union to undertake a comprehensive assessment of its plans for anticipating and coping with disasters.
The agency considers this preparation such a high priority that in 2006-following the devastation caused by Hurricane Katrina-it began including evaluations of disaster preparation plans in the examination process.
"These plans should be commensurate with the complexity of operations and focus on minimizing interruptions of service to members and maintaining member confidence in times of an emergency," Michael Fryzel, then NCUA chairman, wrote in a letter to federally insured credit unions last June.
After assessing its plans and making changes, the credit union should have a comprehensive communication plan for keeping employees, members, volunteers and regulators abreast of the situation. Some of these people should be involved in testing the preparedness and response plans.These safeguards also include protecting assets and records and having contingency office space and back up vendors.
Last year, Callahan Credit Union Financial Services LP joined with DigitalMailer Inc. to develop a service that helps credit unions automatically deliver messages to members, employees and regulators during natural disasters.
The NCUA also urges credit unions to treat disaster plans as living documents that should be updated.
The agency often postpones deadlines for submitting certain reports by credit unions that are temporarily incapacitated. But CUNA and NAFCU have urged the government to establish a more comprehensive regulatory flexibility plan that can be implemented in the case of a hurricane or other natural disaster.
However, even proper planning isn't always enough. Following Hurricane Ike in the Galveston, Texas area in 2008, 32 federally insured credit unions and 15 state-chartered credit unions were nonoperational.
When hurricanes strike, the NCUA takes several steps, including airing public service announcements reassuring people that their deposits are insured, and activating its emergency hotline so members can check the status of their credit unions.
During and after Hurricane Katrina, the NCUA allowed federal credit unions to provide emergency services, including check cashing and ATM access.