With Hurricane Season at Its Peak, How Prepared Is Your Bank?

There’s been a lot going on recently, so you are forgiven if you missed the peak of the 2024 Atlantic hurricane season this week (it historically falls on September 10). So far, six storms have formed, including four hurricanes, causing $8.915 billion in damages, mostly from Beryl and Debby. This week, the South was on Francine watch, with the hurricane set to make landfall in Louisiana Wednesday. 

With the storm season ongoing, banks must stay prepared for potential disruptions. An article from the RMA Journal archives offers a playbook for banks to mitigate risks during hurricanes. While coastal residents are familiar with hurricane plans, banks need to implement similar strategies to protect their operations, clients, and reputations. Here’s a summary of the advice: 

Pre-Storm Tips for Risk Managers 

• Use Forecasting Tools: Implement weather-tracking tools like exposure maps to estimate potential credit risks in affected areas. As storm forecasts update, so should your risk maps, allowing your team to anticipate disaster zones and prepare in advance. 
• Activate Data Teams Early: Engage data teams to track real-time changes in borrowers’ risk profiles using spatial intelligence, ensuring the bank is ready to respond quickly and effectively. 
• Prioritize Employee Safety: Ensure business continuity by conducting call tree tests and reminding staff to follow local evacuation orders. Keeping employees safe is essential for maintaining smooth operations. 

Post-Storm Considerations 

• Focus on Customer Needs: After the storm, your customers may be dealing with the most traumatic events of their lives. Make sure your fee-waiver policies and forbearance plans are ready to provide relief when needed. 
• Monitor Social Media: Reputational risk can escalate quickly during a crisis. Stay on top of customer complaints and respond promptly to avoid negative backlash. 
• Evaluate Impact on Business Lines: Use the storm as an opportunity to reassess risk in different product lines, adjusting your risk forecasts and allowance estimates accordingly. 

Having a well-rounded hurricane preparedness plan in place can save your bank from operational and reputational fallout when the next big storm hits. 

Further Reading 
Preparing for and Responding to Disaster