Disaster Planning: Is Your Plan Ready for the Real Thing

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Disaster Planning Is Your Plan Ready for the
Real Thing?
Florida Government Finance Officers Association
June 12, 2006 Marco Island, FL

John C. Cox, AAP,CTP Industry Strategist Bank of
America 404-607-4751 john.c.cox_at_bankofamerica.com
Sharon Knippenberg Asst. Finance Director City of
Punta Gorda, FL 941-575-3334 SKnippenberg_at_CI.PUNTA
-GORDA.FL.US
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Agenda

• Introductions/opening remarks
• Why Disaster Preparedness?
• Operational Concerns
• Financial Concerns
• Knowledge
• Preparatory Work
• Wrap up

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What is a disaster?

• An event that disrupts an organizations ability
  to function for an extended period of time.

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Disasters

• Do not happen often
• Are always unexpected
• Happen at the wrong (worst) time
• Never are exactly as planned for

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Disaster Recovery vs. Business Continuity

• Disaster Recovery and Business Continuity refers
  to an
• organizations ability to recover from a disaster
  and/or unexpected
• event and resume and continue operations.
• A disaster recovery plan
• Is not business as usual
• Must be designed to restore essential elements of
  the organizations business
• The business continuity plan
• A set of procedures that defines how an
  organization will continue or recover its
  critical functions in the event of an unplanned
  disruption to normal processing.

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Steps in Developing a Disaster Plan

• Evaluate your risks
• Identify the key activities that require business
  continuity
• Develop and document the plan to include process
  and procedures needed
• Test and update plan as appropriate

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What are the Risks?

• Biological hazards
• Loss of workforce
• Power outages
• Computer failure
• Computer viruses
• Computer hacking
• Denial of service attack

• Earthquakes
• Electrical storms
• Tornadoes
• Fire
• Flooding
• Hurricanes
• Pandemic

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Pandemic Preparation

• Plan for the impact on your organization
• Plan for the impact on your employees and
  customers
• Establish policies to be implemented
• Allocate resources to protect your employees and
  customers
• Communicate to and educate your employees
• Coordinate with external organizations and help
  your community
• http//www.pandemicflu.gov/

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Operational Concerns

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Have a plan Practice it

• Dont wait (Practice worst case scenario)
• Dont wait to plan until your City is on the 11
  oclock news as the target of the next Hurricane

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Infrastructure

• Utilities
• You may not have electricity
• You may not have water (or too much water)
• Building
• You may not have an office
• Back-Up Office Space
• Security - ID Badges/City T-shirts (Normal level
  of Security is gone)
• Generators for back up
• Supplies are essentialstock gurus (from diapers
  to bottled water)
• Food essentialkitchen gang
• Community assistance is essential damage
  assessments and aid

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Communication

• Assembling Management team
• Contacting Customers/Clients
• Technology Solutions
• 800 MHz (2 way radio)
• Have two forms of internet connection
• Cable, DSL or an ISP provider. Dial-up Modem
  are not always available as they rely on land
  lines and should be encrypted. Wireless broadband
  modems will likely be restored prior to land
  lines as well.
• Car charger for cell phones
• Satellite phones as back-up
• Regular testing of these back-ups

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Personnel considerations

• Employee notification
• Icon on website
• 800
• Use of news media for notices/announcements
• Phone tree for check in
• Pre-planned meeting for day after disaster for
  key finance personnel
• Establish policy related to leave for impacted
  employees to avoid moral issues among those who
  were able to work

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Debrief

• What worked..what didnt?
• Adjust the plan

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Financial Concerns

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Payroll

• Do your policies adequately cover what you plan
  to pay employees to work during and after a
  disaster?
• Encourage direct deposit/card solution
• Pre-date ACH payroll run/execute payroll early
• Distribution of checks ahead of time
• Some clients were able to distribute payroll in
  the form of cash 2 days ahead of the storm note
  added advantage of not having increased absences
  due to time spent looking for places to cash
  checks
• Cross-train employees on payroll issuance
• Remote payroll (ensure access to ACH software is
  available on this computer)
• Trend is towards internet based applications as
  opposed to desktop software.

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Information reporting

• Have remote site/sister site from which you can
  run accounting functions
• Have digital certificate with you
• Ensure all passwords/800 s are on hand
• Test site regularly

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Cash needs

• Get cash ahead of time-order from banking center
  with 2 day notice if possible
• Distribute extra cash among several key employees
  vs having it with 1 person
• Stop depositing cash to have extra on hand

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Receivables processing

• Use of Lockbox
• Web based Invoicing/Payments
• Remote Computer
• Have all passwords/800 s with you
• Merchant Services

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Purchasing/Disbursements

• Purchasing card either implement for regular
  purchases or have on hand for emergency purchases
• Remote processing
• Wire Transfer (800, Who is set up approved,
  PIN Code)
• POSITIVE PAY
• Have 800 handle exceptions
• Select default choice for exceptions according to
  your preference
• Check stock
• Keep stored in safe room
• Use blank check stock
• Gas supply on hand

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Investments

• Ensure contingency plans in place for investment
  maturities
• Have phone numbers and back up procedures for
  accessing funds

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Knowledge

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Plan for your Personal Life

• You are human your family comes first so take
  care of them before the event so you can focus on
  the job after.

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Accounting and Liquidity

• Determine in advance how you will account for the
  expenditures
• Set up a separate Fund
• Use a project code
• Determine your liquidity
• Where will you draw funds from for the first 30
  days?

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Insurance

• Know how to reach Insurance Agent
• Know what you have insured
• Have copies of Insurance Policies on hand
• Know the claim procedure
• Preparation for Insurance Claim Appraisals up
  to date? Detailed damage reports for FEMA
  required for each building-very large undertaking
  for multi-facility entities FEMA has guidelines
  on their website for non- profit entities.

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Vendor/partner relationships

• Who do you have contracts with to supply you
  before, and after a disaster?
• Review the vendors business contingency plans to
  ensure that any mission critical services can be
  restored within an acceptable timeframe
• Review the vendors program for contingency plan
  testing
• Ensure vendor interdependencies are considered
  for mission critical services and applications

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Data security/file backup

• Have outside company/courier take backup tapes to
  secure location/above ground vault daily
• Essential contact information (waterproof/laminate
  )
• Eliminate paper backups
• Imaging/scan all documents-benefits
• Information is at fingertips
• Major reduction in storage requirements

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FEMA

• Be familiar with the FEMA Public Assistance
  Policy
• Stafford Act (US Code Title 42.Chapter 68)
• Know the categories of allowable reimbursement
• Category A -Debris, B -Emergency Mgmt, C-G
  Permanent Work)
• Know the first steps of applying for assistance
• Request for Public Assistance, State Contract,
  Complete Project Worksheets

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Essential Documents

• Federal Highway Program
• State Mutual Aid Agreement
• Copies of Insurance Policies
• Governing Board Approved Overtime Policy

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Preparatory Work

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Accounting System

• Establish coding to capture sufficient level of
  detail
• By day to choose 72 hour period
• By type of work to choose category of
  reimbursement
• Distinguish between salary and overtime
• Storm overtime vs. non-qualified overtime

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Accounting Tools

• Calculate benefits to apply to pay
  reimbursement
• May need separate calculation for different pay
  types (union, non-union)
• Cost out equipment with FEMA rates
• Set up worksheets for departments in advance

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In-House or Consultants?

• Determine whether you will handle in-house or
  work with a consultant
• Do you have the time?
• Cash flow

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Information Sharing

• Information
• Assimilate accurate information
• Disseminate to the Public
• Bond rating agencies
• Employees
• Citizens

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Training

• Set up all of your reporting forms for access by
  the users
• Give them a basic set of how to and let them
  fill some out

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Designated Responsibility

• Divide and Conquer
• Assign areas of responsibility within Finance
• Category A Debris
• Category B Emergency Management
• Category C- G Infrastructure, Buildings
  Equipment

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External Staff Designation

• Have departments assign you staff who are
  familiar with payroll-to record overtime with
  materials to document related costs with
  equipment to record use.

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Emergency Management Plan (excerpt)

• Shall be the financial liaison with all Federal,
  State and local entities.
• Shall be the authority for attending the
  Applicants Briefing and submitting the Request
  for Public Assistance application
• Shall attend the kickoff meeting with the Public
  Assistance Coordinator.

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Emergency Management Plan (excerpt)

• Shall coordinate preparation of Project
  Worksheets, and all necessary documentation for
  application of funding.
• Shall facilitate cash management for payroll and
  city vendors.
• Shall coordinate with MIS and Procurement to
  ensure that internal control systems are adequate
  for safeguarding the Citys assets.

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Comments from Lessons Learned

• Rigged up a charging station on a generator
• Must test our communication plan regularly
• Need a prerecorded message to instruct employees
  as to what to do
• Need pre-established relationships with TV and
  Radio stations to communicate information
• We have a hidden icon on our website. If
  employees click there, it will provide status and
  instructions to employees
• Most participants in the meeting have not
  documented what they would do different
  now(i.e., have not debriefed)

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Comments from Lessons Learned

• "Our biggest issue was that we rely on the
  Internet for our communications, and our provider
  is Comcast Cable. Service was out for 4 days and
  we used laptops with dial up access as our
  backup
• The toughest thing was communicating among
  ourselves since we didnt have a cell phone that
  worked
• We had to move our computers to another building
  that had power
• We had trouble physically distributing our
  payroll checks. We had a bus caravan to deliver
  them. We didnt know ½ the people we were
  handing checks to.
• We had to deal with what was fair compensation
  for our people. For example, should those out
  with hurricane related issues be paid as those
  actually at work those days? If not, whats the
  fair thing to do? We had no policy for this

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Comments from Lessons Learned

• You get complacent after its over. We need to
  debrief.
• After the hurricane is over, we dont really
  pull out the plan to debrief until the next
  hurricane is on the way.
• We had a continuity plan, but had not
  contemplated a catastrophe
• We learned our building wasnt sound and
  couldnt be used
• We had an inconvenience plan, not a disaster
  plan
• We became an automated bill payee due to my
  personal experiences with the bank websites - we
  really appreciate the value of online banking
• We had to determine the meaning and application
  of fair compensation for our people. For example,
  should those out with hurricane related issues be
  paid? If so, at what level? How would we apply
  compensation rules to those who actually worked
  those days? What was fair? We did not have a
  policy for this issue..

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Additional Information Sources

• Florida Public Assistance (Online Portal)
• http//floridapa.org/
• Federal Emergency Management Agency
• http//www.fema.gov/
• US Dept of Homeland Security
• http//www.ready.gov/
• Florida Division of Emergency Management
• http//floridadisaster.org/
• Dept of HHS (Pandemic Flu Information)
• http//www.pandemicflu.gov/
• American Red Cross (Central FL) (Note Business
  Planning Checklist for Pandemic Flu)
• http//centralflorida.redcross.org/pandemic-flu-pr
  eparedness.php

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Questions and Answers
What are your thoughts?