Don’t wait until you’re knee-deep in a crisis to begin planning for one.
More than just a few companies don’t have contingency plans when it comes to disaster preparedness. In a recent pre-meeting survey results for the NeuGroup’s Global Cash and Banking Group (GCBG), 45 percent of respondents said they do not have a formally documented contingency plan in place. Based on the weather-related catastrophes we have seen over the past several years – and just the other day in the Philippines – this is a scary statistic.
Contingency planning of course aims to prepare an organization to respond effectively to a variety of emergency situations. Developing a contingency plan involves making decisions in advance about the management of human and financial resources, as well as the coordination and communication procedures to be followed in case of an emergency.
Coming up with basic questions of what you need and don’t need is a good start. Imagine not having access to the business tools at the company’s disposal today. How would you accomplish the most critical aspects of your job? For treasury in particular, the money can’t stop. Settlements must be made, employees must get paid. It is in the company’s best interest to ensure that you and your work group know how to respond in the event of an unexpected disaster. Don’t wait until you’re knee-deep in a crisis to begin planning for one.
At the GCBG meeting, one company, with a global reach and thus more susceptible to disruptions, shared with members how it approaches contingency planning.
The company looks at contingency planning from three different directions: (1) risk management, (2) business contingency planning; and (3) emergency response. It’s not groundbreaking, and is only notable for its simplicity and common sense; it can likely be used in planning for any major project the company embarks upon, i.e., TMS implementation or acquisition integration.
- Risk management plan. This plan outlines the tasks and responsibilities to support and maintain an effective ongoing business continuity plan before a disruption occurs. The company created a checklist chart of what everyone is responsible for on a daily basis throughout an emergency. It ensures that treasury and bank contact information, passwords and bank certificates are all up to date, and mandates that employees take laptops and bank tokens home daily. Some companies furnish senior employees with second laptops specifically for this purpose. The downside of this is the fact that laptops outside the company could create a soft spot in the company’s security, so companies should take the proper security measures to mitigate this risk.
- Business contingency plan. This component provides alternative methods to perform the critical treasury processes in the event of a disruption. This company’s treasury manager said employees were encouraged to brainstorm all possible scenarios that one might face, and lay out step-by-step processes to accomplish tasks when normal channels fail. Wi-Fi hotspots (preferably from two providers) and backup servers are worth the investment. This plan should be detailed enough to provide step-by-step instructions of each task (in the event someone unfamiliar with the process has to execute the steps), and may oftentimes include manual processes with the expectation that online systems may not be available if the contingency plan is being executed.
- Emergency response plan. The final aspect of the overall contingency plan outlined the tasks and responsibilities that must be addressed at the time of the disaster. To create this document, one must assign critical tasks and responsibilities, and develop a channel of communication that will be used once the disaster has ensued. A call-tree detailing contact names, phone numbers and emails, along with the proper communication flow (who calls whom) is critical. This document should be kept in a location that is likely to be accessible even in the event of a disaster (cloud based, off-site, etc.).
As many companies have learned the hard way, the time one needs a good contingency plan is in the middle of a disaster. Aside from the company above, other members gave real-life examples of why it is critical for treasury organizations to take the time to prepare very thorough, well thought out contingency plans for a variety of disaster scenarios. Failing to prepare is preparing to fail as the old the saying goes.