Tuesday, September 04, 2007

The Missing Bank Teller

This month the largest exercise to plan for pandemics in the United States will take place. Financial services firms—to the tune of 1,800—will be participating in this simulation for three weeks. The U.S. Department of the Treasury and the Securities Industry and Financial Markets Association will learn, on paper, such pressing questions such as how many employees to expect calling in sick, telecommunications issues, service disruptions and, yes, even long lines at ATMs.

Jim Binder, a spokesman for The Operations Clearing Corp., said the Chicago-based provider of derivatives clearing and settlement services will have 30 to 40 workers involved in the planning exercise. The full details of how the simulation will unfold are being kept secret until it starts Sept. 24, Binder said.

The simulation reminds me, actually of when we used to play war games back in the Army. One thing that would happen is soldiers would be issued “casualty cards” which depicted what sort of injury one would have if they were shot and not killed. Medics, the solder’s units, and the soldier themselves, could react appropriately. In much the same fashion, firms participating in this simulation won’t be able to choose how many employees they will be losing for the duration: Depicting what events as they would be in a pandemic.

How will this affect the consumer, at least on the surface, though?

[The U.K.-based Financial Services Authority] said [an equivalent exercise there] showed that some banks would be forced to close branches and reduce banking services, including ATMs. According to the FSA, the test also raised questions about whether the U.K.'s telecommunications infrastructure would be able to support large-scale teleworking for a prolonged period as staff shortages eroded the maintenance capabilities of service providers.

In a world where catastrophe seems to be something occurring more frequently than in many other times in modern history, something like this seems prudent. And while some minor inconveniences could be experienced for consumers of these various financial service organizations, the long-term benefits will be if something happens catastrophic enough to warrant full implementation of the lessons learned for such an exercise.

Or, at the very least, the lessons learned from such an ordeal can go to help increase effectiveness and efficiency of the organization in peacetime. “Fight as we train, train as we fight.”

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