Central bank survey: Most SFIs have sound business continuity plans

Although the overwhelming majority of supervised financial institutions (SFIs) have sound business continuity plans (BCP) to manage recovery from a major Category 5 hurricane hitting the capital, there are elements that need strengthening, according to the results of a Central Bank of The Bahamas (CBOB) preparedness survey.

The CBOB stated it undertook a hurricane preparedness survey after the catastrophic Hurricane Dorian in 2019 exposed vulnerabilities associated with the supply of domestic financial services.

The survey, which was released last July, found that 87 percent of SFIs had board-approved BCPs.

“In the survey scenario of a major storm, 85 percent of respondents reported that their IT (information technology) disaster recovery plan would be fully activated, 10 percent reported partial activation, while 5 percent would take other approaches,” the survey found.

“In this, 78 percent of firms were confident that they could fully meet their targeted time frames to have critical operations restored. For 20 percent of firms, however, their established recovery time objectives (RTOs) would be partial, although more than half achieved. As to the maximum tolerable period for disruptions (MTPD) (i.e. how long an organization could function without IT) some 20 percent reported that a major storm would push them beyond the tolerance. This was due to potential limitations on back-up power systems without refueling and in the absence of functional telecommunications services.”

Asked whether their continuity plans were adequate to preserve their business objectives in the event of a catastrophic hurricane, 94 percent of SFIs said yes, adding that the use of off-site locations and technology system back-ups provided added confidence.

“Respondents acknowledged the extraordinary challenge of conducting business locally in the aftermath of a hurricane, but appeared confident that available support outside of the country would enable a continuance of some operations. Nevertheless, an appreciable level of responses were qualified along the lines of ‘…making their preparations even stronger.’ The Central Bank considers this a healthy industry response to the lessons of Dorian and the implications of climate change more broadly,” the CBOB stated.

The majority of SFIs, 75 percent, said they maintain backup storage outside of the jurisdiction.

“Also 26 percent of respondents reported use of cloud storage. Virtually all respondents reported that their customer and transaction data were under their direct control. As to the approach to data backup, approaches were mixed between physical and cloud systems, with 42 percent of respondents using physical systems only; 6 percent relied on cloud services only; and 41 percent used both methods,” the report states.

The greatest challenge SFIs have, according to the CBOB survey, is infrastructure, with 84 percent expressing confidence in their occupied physical structures. More than half, 53 percent, said they have a backup environment outside The Bahamas to further conduct business, while 44 percent disclosed alternative locations on New Providence.

“There are three areas where the Central Bank will encourage SFIs to undertake more preparation. An appreciable minority of SFIs need to confirm that their core buildings will withstand a Category 5 hurricane, including reasonably predictable storm surges. In some cases, SFIs are placing generators and electrical equipment in the lowest spots of their buildings and properties. This practice is not ideal in a world where climate change may lead to more hurricanes in the northern Bahamas,” the survey states.

“Some SFIs need to more deeply consider the difficulties their staff will face after a catastrophic New Providence hurricane, particularly staff who have lost housing access. The Central Bank intends to ask the relevant industry groups to develop a code of practice on supporting staff capacity to return to work, after a catastrophic storm.”

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Paige McCartney

Paige joined The Nassau Guardian in 2010 as a television news reporter and anchor. She has covered countless political and social events that have impacted the lives of Bahamians and changed the trajectory of The Bahamas. Paige started working as a business reporter in August 2016. Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News

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