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RLR Newsletter 2nd Quarter 2009 |
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What to do?!?
What to do?!?
A Few Simple Rules…
Many of us are asking…How to survive in these times of credit crisis, regulatory burdens, government control, and portfolio madness?
Maybe it is time to get back to basics. Being a veteran of the S&L crisis in the late 80’s and early 90’s, having survived 9/11, and being in and around banking for the past thirty years, one thing always rings true: Hard work, positive attitude, short term plans, and long term vision works! Ensuring that your ducks are in order builds a foundation for recovery and for growth!
Ask yourself each day, “Am I being productive? Are things being done in the most efficient manner?” If not, why not? And Take Action!!
Ask yourself each day, “Did I make a difference? Did my business unit, my employees, my actions make a difference?” If not, why not? And Take Action!!
Ask yourself each day, “Do I have a short term plan for success? Will it work? Must it change? Do I know how to deal with the obstacles that will inevitably pull me off course?” If not, why not? And Take Action!!
Ask yourself each day, “Am I establishing my building blocks for long term success? Am I efficient? Am I productive? Am I making short term gains?” If the answer to these questions is “Yes”, you are on your way to recovery and long term success. If your answer is “No” to any one of these questions, ask yourself “Why?” and Take Action!!
History has proven that the times we are in may seem unprecedented, but they are not. History has also proven that (to my knowledge) there is no silver bullet to change. Times like these require hard work, self reflection, a positive attitude, and action. I know very few people, very few financial institutions, and very few businesses that are saying, “2009 has been a banner year” (yours truly included). However, we are seeing even less going back to the basics, seeing less challenging the way they do things, and seeing less taking action. Don’t wait for your shareholders or Board of Directors to tell you that your costs are too high. Don’t wait for your regulators to tell you to build a plan, to take action to reduce your risk exposure, or to issue you a C&D. Don’t wait for new technology implemented elsewhere to take deposits and relationships from you. Take action every day, in small ways, to ensure that your “ducks” are in order and to build back the future.
If we can assist you with best practice reviews, risk mitigation programs, technology guidance, and operational efficiencies please contact us at info@rlrmgmt.com, or give me a call at 760-771-5036.
Mitch Razook, President & COO
AND SEE WHAT’S NEW!As our economic and regulatory environments have changed, RLR has committed to enhance our service offerings to meet the changing demands of our Clients and to assist them in these highly regulated and difficult times.
As a result, RLR now offers consulting and analytical services in the following areas:
If your Institution requires assistance in any of these critically important areas, we can help. Please contact John Neely, Executive Vice President of Sales and Marketing at , or send your inquiry to info@rlrmgmt.com.
On June 12, 2009, the World Health Organization (WHO) raised the worldwide pandemic alert level to Phase 6. A phase 6 indicates that a global pandemic is underway.
We may ask ourselves, “Why?” but in all reality this is the World Health Organization and they have decided that a pandemic is underway. That and the guidance we received from the regulators, first in March 2006 (Interagency Statement on Pandemic Planning) and then again in March 2008 (FFEIC Business Continuity Planning Booklet).
Questions that we have been asked are…
How does a pandemic differ from other disasters?
The most significant difference between a pandemic and other forms of disaster is that a pandemic is expected to affect worldwide populations, and 15-35% of the U.S. population (at one time). Illness rates are expected to be 2-5 times higher than typical influenza season, resulting in a substantial decline in workforce. High morbidity and mortality rates are expected.
There will probably be no damage to buildings or technology; however, an area could be quarantined. Critical vendors and suppliers may not be able to provide support due to high employee absenteeism or inability to travel.
Generally, a pandemic is not a one-time event that is over and done with. The disease can spread or be activated over weeks and months.
Over what timeframe would a pandemic occur?
Experts estimate a pandemic will occur in waves (bell-curve) with a 3% daily increase in the number of cases until the peak number is reached, after which the number of cases will decrease at a daily rate of 3%. It is expected that a number of work days will be lost due to adult working parents who will need to care for children, an adult partner, or elderly parents.
A single wave is estimated to last four weeks. The peak would occur at two weeks with an estimated loss of up to 35% of the workforce at that time. If the pandemic spreads more quickly than experts estimate, or if multiple waves occur, the peak number of infections may be greater and the peak “surges” will continue over time.
The impact of two or more waves of pandemic, over a period of weeks or months, should be considered in disaster planning.
As an employer, how can I estimate the number of staff who will be available to work during a pandemic?
In general, experts say that employers should make contingency plans to operate during the pandemic period with at most 85% of staff and between 50% and 65% during the peak of the pandemic. The assumption includes an estimate of workforce absent due to school closure, a gross clinical attack rate, ill workers losing an average 7 workdays, and that for every person remaining in the workforce who gets ill, another person will stay home to look after a spouse, children, parents, or otherwise decline to travel or work.
How can we adjust our contingency plan to incorporate the possibility of a pandemic event?
A Business Pandemic Influenza Planning Checklist is available for download at www.pandemicflu.gov .
The checklist contains the following tasks:
Planning takes time. Are there steps we can take right now to ensure we’re moving in the right direction to address a pandemic event?
Train and cross-train staff to ensure that essential functions can be performed in the event of an absentee rate of 25% to 30%.Will the regulatory agencies expect that Disaster Recovery and Business Resumption Plans include a pandemic response?
Yes. FIL-25-2006, issued March 15, 2006 states that financial institutions should consider the impact of a pandemic and similar threats in event response and contingency strategies. The FFIEC Business Continuity Booklet published March 2008, specifically states that financial institutions should have plans in place that describe how they will manage through a pandemic event.
Where do I start? – Perform a Risk Analysis
References for this article include:
World Health Organization: www.who.int
Centers for Disease Control: www.cdc.gov
PR-30-2006 and FIL-25-2006: www.fdic.gov
Why is it that Banks wait until the regulators are due back in 60 days to get things done? Haven’t you already had 305 days to get ready? Then, why wait? I am a firm believer that when regulators tell a bank what they want to see, they want the Bank to take action, and NOW, not later. Don’t you think that the regulators will figure out that you ignored their recommendations for 305 days, and then decided you better do something? I am sure they will!
What can a Bank do?
Here are a few tips:
After a regulatory exam, document any and all comments in the exit exam, as well as any findings that have been identified.
Build a plan to address all items. Include the item, the action to be taken to correct the item, the person responsible to complete the item and the target date to complete.
Since we all know that “there is not enough time in the day (or year)” to get everything done, prioritize what is most important.
Schedule the high priority items to be addressed in the current or next quarter. Continue the process and schedule out for each quarter, ensuring that you do not miss a date, slip the date, or ignore the plan.
While you are working through the items, document your progress as well as the results. It is best to build a central repository of data, so when the regulators do return, your data is in one place and you are not running around the Bank looking for it!
Perform self assessments. Basically, test yourself! Obviously, do not allow the individual that performed the work to conduct the test, but determine the best qualified person in the Bank to perform a test and test the result. If it is a new policy or procedure, prove to yourself that the policy or procedure is being followed. If it is a new or revised Business Continuity Plan, test the plan.
Give updates to the Audit Committee and/or Board throughout the process.
Bottom Line
Start addressing the items that need to be addressed the day the regulator leaves the Bank. Your life and the future of your Bank will be so much better off!
A new feature to our newsletter, beginning with this issue, is Consultant Corner. These short articles will help you to better know our consultants and provide you with a brief history of our most valued resources. In this issue, we highlight two of our most senior consultants: Chris Manning, Director of Information Security, and Cathi Wickham, Senior Vice President.
Chris Manning has been with RLR for over 10 years, has served as our Information Security Director for over 5 years, and has been our most senior Information Technology professional, having conducted over 100 IT Audits over the past 5 years.
Chris has a long history in Information Technology and IT related businesses, offering over 30 years of IT experience. Prior to joining RLR, Chris was the Director of Management Information Systems for PFF. After leaving PFF 10 years ago, Chris shifted his focus toward IT and IS regulatory activities, joined forces with RLR, obtained his CISA certification, and over the years has become a preeminent resource for Community Banks delivering IT Audits and IS Risk Assessment and Risk mitigation activities.
There is an irony to Chris joining RLR as almost 17 years ago, Mitch Razook (RLR President & COO) was consulting to none other than Chris Manning. After this consulting assignment, Mitch was offered a position to return to banking and chose to accept it, while Chris continued to manage Information Technology at PFF. When it was time for Chris to move on, he contacted Mitch to let him know he had decided to leave PFF. Mitch told him that he might want to talk to his wife Ruth, who was building a consulting practice. The rest is history!
I am sure that many of you reading this know Chris and have worked with him. There is a strong possibility that Chris has conducted one or more IT Audits for your Bank, reviewed your IT policies and procedures or developed an information security program or risk assessment for your Bank. Chris is a respected IT auditor by the regulatory agencies, serves as a partner to our clients in defining and working to resolve uncovered issues, and has been a great asset to RLR for a long time.
Chris resides in Rancho Cucamonga with his wife, Julie, is a member of the Information Systems Audit and Control Association (ISACA), and holds a BA degree from the University of Redlands and a Masters degree in Business Administration (MBA) from Cal Poly Pomona.
Cathi Wickham has a long history with RLR, having joined forces with Ruth over 12 years ago. Cathi, a former banker, has extensive experience in the areas of operations, procedure development, system training, vendor selections, and system conversions. Cathi’s expertise in Fiserv’s Premier Core Processing System has offered her the opportunity to travel throughout the U.S. to assist clients with implementations, conversions, and project management activities. She has had the pleasure of working in such lovely places as Nebraska, New Hampshire, and Illinois during the winter months…what a trooper! Again, many of you reading this article know Cathi and have worked with her. Perhaps she has led your banks effort in selecting a new core processing or item processing solution provider, managed your Bank’s IT conversion, developed better ways for you to use your system or get your job done, or assisted you in opening your doors as a Denovo Bank.
Cathi has been instrumental in the development of RLR, assisting Ruth in years past with developing RLR’s infrastructure and defining how we do business.
Cathi currently resides in Lake Elsinore and attended Brigham Young University and California Intermediate Banking School.
To maintain a “healthy” level of insanity:
Looking to reduce costs, optimize collection and distribution of cash, growth deposits, or increase revenue? 
Cash Management and Correspondent Banking Consulting Services may be your answer.
See details on these new service offerings on our website or email us at info@rlrmgmt.com for more information.
Corporate Office:
78-010 Main St., Suite 200
La Quinta, CA 92253
1-888-757-7330 toll-free
(760) 771-5036
(760) 564-1839 fax
Ruth Razook, CEO:
Mitch Razook, President & COO:
John Neely, EVP, Sales & Marketing:
Cathi Wickham, SVP:
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