March 30, 2020 | Posted by Michael Berman
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4 Minute Read

As many jurisdictions announce shelter-in-place orders as COVID-19 spreads across the U.S., financial institutions are often among the “essential” businesses permitted to stay open. That means your frontline staff might still be having in-person interactions with customers. The back office is still working to maintain smooth operations. The marketing department is keeping everyone up-to-date with your FI’s efforts.

While the necessary functions continue, it’s by no means business as usual. COVID-19 is creating new operational risks that need to be identified, assessed, mitigated, and monitored.

In this second blog in Ncontracts’ series breaking down key operational risk considerations department-by-department, we’re addressing three departments: the frontline, back office, and marketing.

FRONTLINE

Employees directly dealing with customers are in unchartered territory. Balancing the needs of customers with their own personal health and safety, frontline employees are dealing with nervous customers while confronting their own anxieties.

Issues to consider include:

  • Should the lobby stay open? Perhaps it’s better to rely on the drive-thru only, special hours for at-risk populations (aka golden hours), or lobby visits by appointment only.
  • Germs and currency. Money is less than clean even at the best of times. Should there be new protocols requiring gloves or other controls to keep employees safe? Let customers know what you are doing to keep cash safe to limit the spread of infection.
  • How to handle physical contact with customers.
  • Protocols for disinfecting the branch. Check local public health authorities and OSHA guidance.
  • How can we help customers accustomed to traditional banking channels (i.e. coming into the bank for transactions)?
  • What can be done to promote other banking channels that don’t involve visiting a branch?
  • How can we engage with clients? Keeping the lines of communication open with emails, video calls, etc.
  • Limits on cash withdrawals. Should limits be put in place? Make sure you refer to laws and your own deposit agreements to ensure compliance.
  • Notifying regulators in case of closures. If an issue comes up, branches can be closed immediately and regulators should be informed as practically soon as possible. Make sure customers know too.
  • Will account fraud attempts increase if fewer trained staffers available? Be on the lookout for potential red flags for fraud like unusual account activity or large cash withdrawals, wires or international wires. Maintain existing protocols.

OPERATIONS/BACK OFFICE

COVID-19 is also creating new challenges for the back office:

  • Do we expect to offer limited products/services due to staffing shortages? If so, what products/services will be limited?
  • What alternatives are available for live-based events (educational events, physical signatures, etc.)? If there is no alternate signature technology, can be there be a grace period for signatures?
  • Do we have updated procedures for all key functions? If someone becomes unavailable, is something else cross-trained to do that work?
  • How can we leverage geographical diversity? What if the virus or FI is concentrated in one area? Which offices are opened/closed?
  • What is the process for closing and re-opening offices, if needed? If open, what precautions must be put in place?
  • Are systems in place for critical staff to work from home?
  • If branches are closed, are there several other ways for customers to access funds (ex: electronic transactions, drive-thrus, and ATMs)?
  • Is it possible to share resources with another FI?
  • Should limits on remote deposits be increased?

MARKETING

There’s a reason why you’re receiving an email about the COVID-19 response of every company you’ve ever given your email to. Communicating with customers/members, the community, the media and shareholders is essential to getting out the facts.
If your FI isn’t communicating with internal and external audiences, the lack of information will lead to rumors, speculation, and gossip.

  • Communicate updates to customers, community, the media & shareholders. Overcommunicate to increase transparency.
  • Let customers/members know what you’re doing, how they can reach you, what they should do if they need access to services and any limitations. (Social media, email, webinars, etc.)
  • Share information to prevent the spread of rumors. Gossip will fill the vacuum if there is no other information.
  • Host virtual happy hours, lunches or coffees to encourage teamwork and community.

As always, risk discussions shouldn’t stay in a single department. In many cases, the risks presented by COVID-19 will impact numerous departments and business lines. Assessing, mitigating, and monitoring will require interdepartmental collaboration and an enterprise-wide approach to risk management.

To learn more about how to assess the operational risks of COVID-19, listen to Michael Berman’s new webinars:
Managing Coronavirus Operational Risk Department-by-Department for Community Banks
Managing Coronavirus Operational Risk Department-by-Department for Credit Unions

Michael Berman

Michael Berman

Michael Berman is the founder and CEO of Ncontracts, a leading provider of risk management solutions. His extensive background in legal and regulatory matters has afforded him unique insights into solving operational risk management challenges and drives Ncontracts’ mission to efficiently and effectively manage operational risk.