By Caitlin B. Houlton Kuntz and Edgar R. Ocampo
Banks are required to maintain Business Continuity and Disaster Recovery Plans (BCPs) to ensure continuity of business operations in the event of significant business disruptions. BCPs often focus largely on a bank’s core technology systems and processes. Recently, however, COVID-19 reinforced the need for banks to consciously plan for disruptions of their most valuable (and sometimes taken for granted) asset—human capital.
The following are operational and legal considerations for bank boards and management to address when planning to mitigate a compromised workforce:
Review Regulatory Guidance
The FFIEC’s Business Continuity Management Booklet outlines regulatory expectations for preparing for staffing challenges in the event of situations like pandemics or national emergencies. Additionally, federal and state regulators have periodically issued guidance addressing particular situations (including pandemics) that the bank’s board and management should take into account.
Incorporate Human Capital Risks into the Bank’s Business Impact Analysis and Plan Accordingly
Thoughtfully consider the impact a personnel compromise would have on the bank’s overall business operations. Banks should take stock of “key man” problems – ensure that employees are cross-trained on critical functions and that leadership succession plans are in place. Further, establishing staffing levels necessary to perform critical functions in order to identify risks associated with employee absenteeism is essential. Finally, examine customer needs and banking habits to determine what adjustments to customer service operations would be possible or necessary in the event of a staffing crisis.
Plan for Alternative Work Arrangements
In emergency situations, financial institutions are likely to be considered “essential services” and must generally remain open to the extent possible. Banks should ideally have in place plans to facilitate employees working remotely, including establishing the necessary technology, systems, and support. For example, consider outfitting essential employees with home office equipment (such as laptops), and determine which critical systems can be accessed and controlled remotely. Additionally, coordinate with key vendors to ensure critical services, infrastructure, and system capabilities (including remote network access, online banking, phone systems, and ATMs) are sustainable, and periodically stress test these functions to ensure they can handle increased traffic.
For employees who perform essential or regulated functions that cannot be moved offsite, develop alternating work schedules and social distancing guidelines to avoid close contact among staff. Finally, educate employees and customers on best practices issued by the Centers for Disease Control and other public health authorities to help keep everyone safe and informed.
Keep a Current Communications Plan
Make sure your bank has procedures for keeping the board, management, employees, customers, and regulators abreast of changes in the bank’s policies and operations, as appropriate. Banks should ensure their senior leadership has access to up-to-date contact information for each group.
Be Mindful of Legal Implications
Various laws come into play when developing and implementing BCPs to address the challenges of crises such as pandemics or national emergencies. The Americans with Disabilities Act; Title VII and other anti-discrimination laws; federal, state, and local leave laws; workers’ compensation laws; HIPAA and other privacy laws; OSHA; and evolving laws and orders specific to the current crises or emergency—all likely do not prohibit measures banks and financial institutions can use to address such crises, but banks should consult with legal counsel to ensure compliance and mitigate legal risks.
Likewise, safeguarding the well-being of employees plays an important role in keeping a bank operational during uncertain times. While practices implemented by banks and financial institutions may delve into control measures and mitigation of the effects of a crisis on business operations, challenges in maintaining employee morale are often not discussed with the same fervor. Some important issues to consider in BCPs include how to handle fear, anxiety, or even xenophobia in the workplace, as has been a concern for some industries during the COVID-19 crisis. BCP designated personnel need to consider how to manage these realities in the workplace, even over scenarios that would be benign during normal times. Consideration for the mental well-being of employees needs to be factored in alongside these practices to ensure retention of a workforce.
Remain Flexible—and Empathetic
The impact, scale, and duration of crises that threaten a bank’s human capital, such as pandemics, are uniquely unpredictable. At its core, the BCP’s approach to human capital challenges should incorporate an element of agility to help the bank respond to variable and evolving circumstances, as well as account for the humanity of the workforce. Employees’ personal and professional circumstances will differ greatly and require mindful responses and accommodations. Therefore, supporting human capital means finding constructive ways to remain empathetic and support employees through the emotional strain these crises can cause.