The Impact of Hurricanes on Banking Operations

Often, a bank’s hurricane plan is largely operational in nature, including such things as managing branch closures and anticipating repairs. These operational plans are important, but often the logistical considerations tend to overshadow the broader issues that can prove costly during these events.

The difference between having a broad-in-scope risk management plan and not having one can be costly to shareholders and disruptive to clients, including families and small businesses that serve as the backbone of smaller coastal communities. The purpose of this article is to share a playbook developed at SunTrust, in the hope that other financial institutions, regardless of size, may benefit.


  1. Leverage weather-forecasting tools in your risk management plan. When Hurricanes Harvey and Irma were set to hit the U.S. mainland this past summer, we developed exposure tracking tools using a “cone of uncertainty” like those created by weather bureaus and the National Oceanic and Atmospheric Administration. This allowed us to target broad geographies and calculate the bank’s credit exposure by line of business and product in those areas.

    Just as the cone is designed to show increasing forecast certainty and narrow over time, our exposure zones were updated accordingly with each new forecast. Our maps of final exposure zones highlighted what would likely become disaster areas before they were declared so by FEMA. Again, time is a precious commodity and any advantage gained can aid in executional performance. Our final high-risk zones proved a near-identical overlay to the disaster areas declared by FEMA and other third parties such as property and casualty insurers and credit-rating agencies.

  2. Make sure data teams are engaged early on. Developing an internal forecast will be useless if data teams are not standing by to make real-time adjustments to exposures using borrowers’ zip codes and other spatial intelligence techniques. If those data teams are housed outside of the risk organization, make sure you have their attention and support early.
  3. Ensure teammate safety. Make sure leaders are ready to initiate business continuity through the use of call trees. Take advantage of the lead time typically associated with hurricanes by testing your call trees, even if you have done so recently. As leaders, set a calm, supportive, and reassuring tone through your internal messaging, and make sure teammates do not feel pressure to stay too late in a given area for the sake of the firm. Make it clear to your teams that they need to heed the warnings and evacuation orders of local officials. And establish a process for them to check in with their managers to account for their personal safety, whether they shelter in place or evacuate.

  4. Consult IT teams regarding remote access and other likely needs. Many employees, if they have power, may have to access bank systems remotely for a time. Make sure your systems can handle these higher volumes in concentrated locations. Also, work with your marketing and social media partners to make sure digital web banners and social posts can be added or updated quickly in order to direct customers to key contact areas and resources, such as mobile ATMs or open branches in their area.

  5. Review current forbearance and fee-waiver policies. Who in the organization will have to approve payment waivers and forbearance plans in accordance with your current governance? If any policy changes need to be documented, do it before the storm. Ensure clarity around decision rights in advance, before your executives potentially scatter or become hard to reach.

  6. Ensure the adequacy of call-center plans. Having one Category 4 or 5 hurricane hit your markets is often challenging enough. What if two, three, or more storms arrive on its heels? What is your ability to redirect customer calls to other geographies if needed? Are current call-center scripts in line with your current policies and regulatory guidance? If not, you know what you need to do.

  7. Consult previous regulatory guidance. Take advantage of recent guidelines from the banking agencies that can provide insight into regulatory expectations during natural disasters and help identify potential gaps. One such example is Interagency Supervisory Guidance for Institutions Affected by Hurricane Katrina, which is available on the FFIEC website.

  8. Review key accounting policies. Be sure you communicate with internal finance and accounting teams on key definitions such as troubled debt restructurings (TDRs) and the potential accounting impact of increases in that regard.

The above is based on an excerpt from The RMA Journal, December 2017 - January 2018 article “The Impact of Hurricanes on Banking Operations: Preparation and Recovery” by Mo Ramani, chief credit officer and head of financial risk management for SunTrust Banks Inc. You can read the article in its entirety here.

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