Banking regulators update pandemic guidance as coronavirus cases grow

With U.S. coronavirus cases on the rise, federal bank and credit union regulators issued updated guidance Friday on actions financial institutions should take to minimize the potential adverse effects of a pandemic.

The Federal Financial Institutions Examination Council released a 10-page interagency statement recommending steps FIs should take to proactively prevent disruption of operations, minimize contact between staff and customers, and plan for how affected employees reenter the workplace, among other things.

The recommendations are an update to FFIEC guidance issued in 2007 directing how financial institutions should address pandemics in their business continuity plans.

“Pandemic planning presents unique challenges to financial institution management,” the FFIEC said in the interagency statement. “Unlike natural disasters, technical disasters, malicious acts, or terrorist events, the impact of a pandemic is much more difficult to determine because of the anticipated difference in scale and duration.”

Bloomberg News

The guidance came after lawmakers had urged regulators to give institutions clarity on how they should work out loans with businesses and consumers who may be affected by the coronavirus. As of Friday, U.S. cases of the virus had reached 250. Global economic shocks from the outbreak led the Federal Reserve on Tuesday to announce an emergency interest rate cut.

The regulators — including the Fed, National Credit Union Administration, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency — focused on five different areas in which institutions should prepare for a pandemic.

One was to develop a program to reduce the likelihood that an institution’s operations will be significantly affected by a pandemic. Prevention includes monitoring potential outbreaks, educating employees, communicating and coordinating with critical service providers and suppliers, and providing appropriate hygiene training to employees.

Secondly, institutions should develop a strategy for recovering from a pandemic wave.

A comprehensive framework of facilities, systems, or procedures is necessary for an institution to continue its critical operations in the event that large numbers of employees “are unavailable for prolonged periods,” the FFIEC said.

Companies also need to consider minimizing staff contact, encouraging employees to telecommute, and redirecting customers from branch to electronic banking services or conducting operations from alternative sites. Companies also should consider whether to restrict visitors from facilities.

A testing program ensures that pandemic planning practices and capabilities are effective and will allow critical operations to continue.

Finally, an oversight program is needed to ensure ongoing review and updates to the pandemic plan so that policies, standards and procedures include up-to-date, relevant information, the FFIEC said.