<img src="https://ws.zoominfo.com/pixel/pIUYSip8PKsGpxhxzC1V" width="1" height="1" style="display: none;">

Pandemic Preparedness & BCP Department-by-Department Series: COVID-19 & Board & Management (Part 3)

author Michael Berman
2 min read
Apr 3, 2020

 

Operational resilience is about more than business continuity management (BCM). It’s about having a strong governance and oversight structure. It’s about ensuring decision making is strategic and well informed.

At financial institutions, that’s the job of the board and management.

As COVID-19 spreads across the country, boards and management are making critical decisions to adapt to changing conditions. In addition to understanding what each individual area of the FI is doing to respond to the crisis and maintain operational resiliency, they are also high-level risks that can only be addressed by top leadership.

In this third blog in Ncontracts’ series breaking down key operational risk considerations for the COVID-19 department-by-department, we’re talking about the board and management.

Related: What is Business Continuity Management?

BCM: What Board & Management Need to Consider Right Now

When it comes to the operational risks of coronavirus, the board and management’s goal isn’t just to put a band-aid on the situation. It’s to assess operational risks in terms of how it will impact the FI’s strategic direction moving forward.

It’s imperative that the board and management ensure that any decisions made align with the FI’s goals, mission, and vision. This allows the board and management to allocate resources to the most pressing risks.

When assessing the operational risks of COVID-19, the board and management should factor these considerations into BCP decision making:

Financials.

Most FIs had a positive financial outlook for 2020 until COVID-19 emerged. Now it’s likely FI’s will be reassessing projections and shifting resources to more immediate concerns. Long-term goals not immediately related to COVID-19 response may be put on the back burner. Areas to think about include:

  • Liquidity
  • Earnings
  • Budgeting and spending on operational resilience
  • Impacts on mergers & acquisitions
  • Changes to tax policy & financial reporting
  • Impact of cost reduction efforts
  • Capital investment strategies
Personnel.

COVID-19 is highly contagious and has killed over 2,000 people in the U.S. so far. This raises the specter of risk no one likes to talk about: that key staff might fall ill and even die. The board and management need to ask:

  • Do we have redundancy in our key positions?
  • What would happen if one of the key leaders was ill or died?
  • Is our succession plan up to date?
Vendor management.

Not every vendor is guaranteed to survive the crisis. The board and management need to know the status of critical vendors.

In particular, they need to know about any force majeure clauses, a contract provision that excuses a vendor from providing a service as promised. These clauses vary from contract to contract and may or may not include pandemics. It’s important to know where you stand financially if a critical vendor can’t perform. Ideally, if they can’t perform, your FI won’t have to pay and can deploy those funds to a stronger vendor.

Communication.

The board and management may not be able to get together in person, but they still need to meet. The board needs to think about:

  • How are employees staying informed of developments?
  • What procedures are in place for remote meetings?
  • What do the bylaws say about remote meetings?
  • Do we have the technology and training needed?
  • How often should meetings occur?
  • What are the regulators saying?
  • How are we communicating with customers?

For more insights into how COVID-19 is impacting operational risk and resiliency, join us for our webinar Unprecedented: COVID-19, Vendor Management and Managing the New Normal, on Wednesday, April 8, 2020 @ 2:00 PM CT.

Next part: Pandemic Preparedness & BCP Department-by-Department Series: COVID-19 & Compliance and Risk (Part 4) 

 

Learn more on Business Continuity with our Resources Page.

Subscribe to the Nsight Blog

All Topics Risk & Compliance Product Insight Banks Lending Compliance Credit Unions Risk Management Fair Lending Nfairlending Cluster: Risk Management Compliance Lending Compliance Management Integrated Risk Blog Regulatory Compliance Management Nrisk News & Updates HMDA Risk Mortgage Lenders Vendor Management Ncomply Business Resiliency CRA Lending Compliance Blog Vendor CFPB Ncontinuity Business Continuity Third-Party Vendor Management Cybersecurity Fintech NVendor Strategic Planning Ncyber Regulatory Updates Ntransmittal Audits & Findings OCC Regulatory Compliance Company Culture Audit Nverify Compliance Management Exams FDIC Nfindings Findings NCUA Contract Management Employee Intranet Business Continuity Management Contract FRB Findings Management Enterprise Risk Management FFIEC Ncontracts manager Third-Party Vendors Vendor Risk Vendor Risk Management Wealth Management 1071 ABA Bank Access Control Artificial Intelligence Audit Findings Board Portal Call Report Compliance Risk Cybersecurity Assessment Digital Tansformation Due Diligence Efficiency Employee Engagement Exam findings FIEC Governance and Risk Management Inc. 5000 Internal Audit Management Mortgage Lending Nboardportal Verify integrated risk management
Pandemic Preparedness & BCP Department-by-Department Series: COVID-19 & IT (Part 6)
Banks

Pandemic Preparedness & BCP Department-by-Department Series: COVID-19 & IT (Part 6)

Apr 10, 2020 4 min read
Pandemic Preparedness & BCP Department-by-Department Series: COVID-19 & Compliance and Risk (Part 4)
Banks

Pandemic Preparedness & BCP Department-by-Department Series: COVID-19 & Compliance and Risk (Part 4)

Apr 6, 2020 3 min read
Pandemic Preparedness & BCP Department-by-Department Series: COVID-19 & Human Resources (Part 1)
Banks

Pandemic Preparedness & BCP Department-by-Department Series: COVID-19 & Human Resources (Part 1)

Mar 23, 2020 3 min read