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Financial Building

Yes, We’re Open: How Staying Open During the Storm Can Benefit Your Bank

Sep 16, 2019

In September 2016, the city of Cedar Rapids, Iowa, was hit with its second biggest flood in area history, with the Cedar River cresting at just under 22 feet. Thousands of area residents had to leave, and many businesses shut down to prepare for the worst-case scenario.

Following the record-breaking 2008 flood which saw the river crest at 31 feet, the City of Cedar Rapids made changes to their emergency response plans and infrastructure. These preparations and advanced notice of the flood were largely effective, helping to minimize the damage and allowing many Cedar Rapids residents to get back to business much more rapidly than initially expected.

Many places have not been so lucky. Mississippi has experienced severe flooding that caused massive damage and widespread power outages for homes and businesses. To help Mississippians get back on their feet, the Federal Deposit Insurance Corp. has encouraged banks to “work constructively with borrowers experiencing difficulties beyond their control.” The FDIC believed those efforts would “serve the long-term interests” of the banks.

The time immediately after a disaster is when banks can make themselves most useful. By providing citizens with the funds they need — through loans or other means — banks play an integral part in recovery efforts and can foster goodwill in the process.

Unfortunately, many banks opt to preemptively close branches in areas where storms and floods hit, assuming potential outages could force them to shut down. These banks tend to view this as a cost-effective measure to only pay employees who are actively working. In making this decision, many banks rely on TV and app-based weather forecasts that lack the sort of accuracy and location-specific context necessary to make such an important decision.

While it’s prudent to take precautions to mitigate potential losses, this knee-jerk reaction could inflict serious damage on a business’s bottom line and cause more headaches than it’s designed to prevent. At the same time, the bank could be missing an opportunity to truly serve its clients and community.

Ripple Effects

It’s important to remember that shutting down a single location can have a larger impact than is immediately obvious, with effects rippling out to encompass the entire business, its customers, and its suppliers. A hasty shutdown can lock clients out of critical services and overburden nearby locations that remain open.

Closures can also leave vendors stuck with stock they are unable to move. The price of such an inconvenience can be minimal for some businesses, but it’s a costly nightmare for banks that routinely interact with armored vehicles full of cash.

Even if the extra cost were not a factor, businesses must notify vendors early to avoid stranding delivery drivers in the same inclement weather that caused the closure. An impulsive decision to close without all of the facts could be seriously detrimental — and in some cases dangerous — to other parts of the supply chain.

Preparing for the Worst

While there are plenty of reasons to carefully consider any decision to close, this isn’t to say that shuttering a location should be off the table when faced with inclement weather. Rather, executives should take several key steps to minimize costs and keep their branches open for business as long as possible.

1. Prevent damage to your building and people.

No one wants customers or employees to suffer any injuries, but you should take extra care in the run-up to a potential outage. Proper precautions will ensure you keep people safe while reducing the possibility of lawsuits or workers’ compensation. Planning in advance will also help minimize inconvenience to employees, customers, and vendors.

There are easy and effective measures you can incorporate into your planning today, such as boarding up windows before a hurricane, or keeping the tools and equipment needed for cleanup and basic repairs on hand. These kinds of preparations are not only financially prudent, but can significantly reduce recovery time.

It’s also a good idea to take preventive steps to keep your branch in business and ensure it can open on time. For example, you might consider contracting with a snow-removal crew before a blizzard hits--even better, before the snow season starts. In addition to preventing a business outage, it could actually help lure a greater number of customers through your doors (and your snow-free parking lot).

2. Step up your weather game.

When you’re planning for the worst, look beyond your local TV meteorologist. Consider investing in a commercial weather forecast service that will allow you to isolate conditions on a location-by-location basis. This will allow you to be more efficient in deciding which locations you want to close, which you should shore up, and when it’s safe to reopen.

Consider a scenario with two banks in a community—one in the flood zone, the other along the evacuation route. Proper intel would help you decide to prepare the latter for additional business. The location in the flood zone most likely will have to close at some point, but there is no reason to waste time preparing both facilities for the same conditions.

A more detailed weather forecast can tell you when a location needs to close, when it is in real danger of significant damage, and when it can safely remain open. This sort of specificity helps avoid an inefficient, one-size-fits-all approach that leads to unnecessary closures and wasted resources.

3. Get ready to work through an outage.

Don’t focus solely on loss. Instead, consider what you can gain by maintaining near-normal business operations in a disaster zone when competitors are unable to support their clientele.

Preparing to stay open during an extended outage can be costly, but consider the alternative: You could just as easily damage client relations or lose the ability to serve customers altogether. When financial institutions can maintain somewhat normal operations during a time of crisis, this spells good news for customers. You can strongly reinforce brand loyalty among customers whose financial needs are likely more pressing than normal.

Closures are going to happen at some point regardless of how well you prepare, but they don’t have to be commonplace or long-lasting. By relying on a professional weather service and taking the proper precautions ahead of time, you can stay open for business even when your competitors are closing up shop. Your customers will likely appreciate you being there for them when they need you most.

Take the Next Step

If you're searching for ways to reduce costs associated with severe weather, and improve your company's operations and response, the team at StormGeo can help. Our meteorologists and business continuity experts can ensure you have the most accurate weather data for your business -- customized to your specific asset locations and business needs -- so you can make better business decisions. Get in touch with us today to learn more about how we can help your business.