0 Disaster Preparedness: Is Your Plan Ready for the Real Thing? August 2006

1 Presenter – Steve Herndon Bank of America Steve Herndon Senior Vice President Global Government Banking Executive Bank of America Mr. Herndons group is responsible for all services provided to the US Government and International Governments globally. He also has oversight for the enterprise view of state and large municipalities. Bank of America acts as a financial agent to the US Treasury and other government agencies, providing collection, treasury and disbursement services under the Plastic Card Network, Electronic Federal Tax Payment Systems (EFTPS), IRS Lockbox, General Lockbox, Bankruptcy Trustees, US Courts, and numerous depository relationships under Treasury General Agency contracts During 28 years with Bank of America, has held a variety of management positions in areas such as Operations, Product Development and Client Management with the last 13 years focused solely on Government Banking.

2 Welcome and agenda Key steps Understand the key steps in developing a disaster recovery/business continuity plan Critical treasury functions Learn what critical treasury functions should be under your microscope Best practices Hear best practices and lessons learned in the areas of Payroll, Payables, and Receivables

3 What is a disaster? What is disaster recovery? An event that disrupts an organizations ability to function for an extended period of time Disaster Recovery and Business Continuity Refers to an organizations ability to recover from a disaster and/or unexpected event and resume and continue operations

4 Crisis Readiness Across the United States 56% 20% 30% Created or updated an Evacuation Plan In the past year Prepared for a pandemic outbreak such as bird flu Received sufficient federal resources for first-responder communications Crisis Readiness % of cities surveyed that said they have: A survey of 183 cities (from Bothell WA to New York NY) paints a grim picture of the nations disaster preparedness nearly 5 years post 911 attacks. Most cities have not received enough money to get police & firefighters the radios/equipment needed to communicate in the event of a crisis. More than 4 in 10 cities have not created or updated evacuation plans since last falls Gulf Coast hurricanes. FEMA is still getting mixed reviews on how much confidence US cities have in their abilities post- Katrina. * source: USA Today July 26, 2006 print edition

5 Steps in developing a disaster plan Know your risks Mitigate as many risk exposures as you can Identify key activities you need to plan for Pick the best recovery solution that you can afford Develop and document plan Test your plan and document issues/lesson learned Update your plan and keep it current Repeat process at least annually And keep raising the bar!

6 Heres what you told us How prepared is your organization to conduct basic business and financial functions in the event of a disaster striking your community?

7 What are the risks? A U.S. example

8 Pandemic preparation Plan for the impact on your organization on your employees and customers Establish policies to be implemented Allocate resources to protect your employees and customers Communicate to and educate your employees Coordinate with external organizations and help your community

9 What are the critical activities/issues? Communication System and Application Recovery Information Reporting Logistics Payroll, Payables, Receivables and Funding Personnel

10 Communication, System Recovery and Information Reporting Communication is KEY Eliminates duplication of objectives/efforts Have policy/procedures clearly outlined and disseminated prior to disaster Keep prime business partners informed; have plans and administrative scheduling out front so customers and other state agencies know what to expect Ensure you have alternate communication methods 800 MHz (2-way radio), two forms of Internet connection, car charger for cell phones, satellite phones as backup System and Application Recovery Information reporting Dont use an alternate site in your geographic location as your ONLY option for disaster recovery (in the event the remote site is inoperable or without resources) Keep computers/servers with you and transport if necessary Ensure all passwords and 800 numbers on hand Conduct testing of alternate site and calling trees regularly

11 Documentation & Logistics Document as you go – you will not be able to recall every detail later Address documented issues as soon as feasible Conduct post-mortems on tests and areas where the disaster recovery plan was used only partially to address what needs to be updated/changed Make sure your plan addresses backup transportation needs for key personnel Empower the right people to make decisions (i.e., getting payroll distributed early, keeping phone lines open, providing backup administrative support) This ensures your disaster recovery plan continues to function if an unidentified scenario arises – keeps associates moving versus waiting for an answer

12 Payroll, Payables and Receivables Payroll Payroll policies Direct deposit and card Pre-date ACH payroll run, distribute checks early Cross-train employees Remote payroll Use Internet Receivables Web-based invoicing/payments Use lockbox Merchant Services Payables Electronic Payments Remote processing Wire transfer Positive Pay

13 Personnel Employee notification Icon on Website, 800 number, news media for notices/announcements, phone tree for check-in, preplanned meeting after disaster Establish policy related to leave for affected employees

14 Federal Emergency Management Agency U.S. Department of Homeland Security Department of Health & Human Services (Pandemic Flu information) American Red Cross Disaster Recovery Journal Resources

15 Top points to remember Know your risks Identify key activities Have a plan Test the plan Update the plan continuously Utilize technology to become more Disaster Resistant Key considerations

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