Business Continuity Tips From The Tundra

An Alaska credit union provides best practices for mitigating operational risk in challenging environments.

 
 

In October, credit unions along the eastern shore board fought back against Hurricane Sandy with every resource available. But the super storm is only the most recent in a long line of national disasters that remind cooperatives of the need to be prepared when inclement weather arises.

Not all weather–related business continuity risks can be avoided, but their impact can be lessened with proper planning and a strategic operational mindset — factors Alaskan credit unions are particularly well versed in.

Alaska may be the 49th state, but it ranks much higher in terms of the exigent weather and terrain that its businesses must overcome. Yearly snowfall in Anchorage averages 69.5 inches. And last winter the worst snowfall of the past 60 years dumped 134.5 inches by mid-April, according to Reuters.

FAST FACT

Extreme weather caused $23.9 billion in combined property and crop damage last year, more than twice the amount in 2010, according to the National Weather Service.

Despite these challenges, Credit Union 1 ($826.9, Anchorage, AK) sees near-unlimited potential for its state, its institution, and its more than 70,000 members. With annual ROA of 0.86% and 12-month loan growth of 15.56%, according to Callahan & Associates’ Peer-To-Peer Software, the credit union is always moving forward … even if it has to rely on unconventional means to make it happen.

“Alaska presents some unique challenges,” says Leslie Ellis, president and CEO of Credit Union 1.

The credit union knows how to position both its physical presence — it has 15 branches, some so remote they are only accessible by plane — and its technology — it has growing online and mobile capabilities— to guarantee a consistent experience for members.

Rethink Remote Operations

“With our geographic constraints, there are two reasons we need technology:  delivery channels for our members and everything involving the credit union and its employees,” Ellis says.

The credit union has locations it cannot connect to via fiber or cable because of their remoteness. This limits the types of software program the institution can deploy, but it also challenges the credit union to think creatively about IT management and support.

“Our IT essentially runs on satellite,” Ellis says. “That’s our data feed.” 

Subsequently, the credit union conducts all system updates through the headquarters in Anchorage and then pushes them to the outlier locations.

But it’s not just data the credit union manages from a central location. Virtual communication options allow the credit union to manage a majority of its in-person business functions remotely.  

 “We can’t fly in all our remote staff for training,” Ellis says. So options such as video conferencing and SMART boards present an affordable alternative.

Credit Union 1 relies on these technologies for its primary operations, but should a disaster occur, the credit union can instantly shift its resources to maneuver data, support, and operational guidance wherever they are needed most.

Develop Resources Before They’re Needed

Information is only part of the equation. There’s also the physical task of keeping the lights on and the doors open, so Credit Union 1 stockpiles supplies in its branches.

“A big part of business continuity planning is knowing how to keep these locations running if there is a disaster in a remote area or if there is a service interruption and we can’t get there immediately,” Ellis says.

The credit union has items such as generators and secondary heating systems as well as spare financial equipment, including the units used to create instant issuance payment cards.

When hunkering down is not an option, credit unions in remote areas need the ability to move operations or create alternative sites.

“We’ve researched who would make a facility available to set up shop on a limited basis,” Ellis says. “We’ve also explored what cash sources are available in those communities.”

FAST FACT

According to an international survey by virtual office provider Regus, only 55% of companies with existing disaster recover plans could be operational within one hour of an interruption and just 45% would be able to secure an alternative workspace in the same time frame.

There is certainly a cost to being prepared, and this cost increases in challenging environments. With an annual operating expense of $265 dollars per member, Credit Union 1 spends more per member on average than its asset-based peers across the United States. However, it still spends slightly less than the average Alaskan competitor.

Take Off The Training Wheels

Perhaps the most critical, and one of the most difficult to evaluate, portions of a business continuity strategy is the people. However, Credit Union 1’s structure allows it to test the leadership and problem-solving capabilities of its employees long before an emergency scenario arises.

“Headquarters is there to support the branches, but we can’t always be hands-on,” Ellis says. “Managers and senior staff have to be able to operate independently and, while following standard operating procedures, solve their own problems.”

Overcoming these challenges often leads to increased confidence and personal growth, which can drive future success in all areas of performance.

This holds true for Credit Union 1’s 294 full-time employees. Its employees are slightly better compensated than its asset-based peer group, but they also generate approximately $370,000 more in loans per employee than similar-sized institutions.

 

 

 

Dec. 3, 2012


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