Each depositor insured to at least $250,000 per insured bank

Summer 2011

Banks Are Required to Prepare For Disasters

Federal and state banking regulators require financial institutions to develop and test “disaster recovery” and “business continuity plans.” Each plan must spell out how the bank will recover data, ensure the availability of cash, continue serving customers, and otherwise function efficiently after a wide-ranging disaster — one in which personnel may be unavailable, key facilities are crippled, and power and phones are out for an extended period.

According to Michael Jackson, an Associate Director in the FDIC’s Division of Risk Management Supervision, disasters ranging from the terrorist attacks on September 11, 2001, to the deadly tornado that hit Joplin, Missouri, in May of 2011, were reminders that the financial industry and its regulators “must be ready for disasters of any magnitude or duration — you cannot just plan for something small or brief.”