Contingency Planning: How to Expect the Unexpected

Natural disasters, socio-economic issues and political risks all have the potential to threaten treasury’s ability to fulfil its strategic goals.

Irene Shenouda, vice president in global transaction banking’s cash management corporate sales division at Deutsche Bank, started proceedings by highlighting that treasury centralisation is key for contingency planning. This includes concentrating banking relationships and accounts, ensuring all relevant parts of the business are working from one enterprise resource planning (ERP)-type solution, and ensuring payment format standardisation so that standard processes exist throughout the entire organisation.

Centralisation and standardisation ensures that, if one location that the business operates in goes down, another location can pick up these operations smoothly.

Shenouda commented that bank agnostic solutions, such as standardised processes including SWIFT standards and eXtensible markup language (XML), could really help treasurers take their contingency planning to the next level.

Theory Into Practice

Two corporates were also on hand to provide case studies into how their organisations have tackled implementation of contingency planning programmes.

Kristin Walle, vice president of treasury and trust operations for the added value services division at Automatic Data Processing (ADP), discussed how the company had established a centralised organisation in March 2013.

As part of this, ADP treasury reviewed all global operations as part of new enterprise risk management framework. This included evaluating the preparedness of the organisation’s people, processes and technology for contingency events.

ADP has both mature and emerging operation, and so Walle’s team had to assess a variety of existing processes in order to deliver contingency planning from a centralised perspective.

From a risk and compliance perspective, the team analysed opportunities for standardisation across the organisation. Operationally, the project included a full review of technology platforms and infrastructures, as well as contingency and recovery operations. The treasury team then identified 30, 60 and 90 day opportunities for consolidation.

Walle made it clear that as part of any contingency planning strategy, treasurers need to manage all aspects of an event. This means that everybody within the organisation should understand their roles and responsibilities through a programme of training and testing. Communications, both internal and external, are critical. Treasurers need to determine the impact and severity, both real and

potential, at the onset and throughout an event. Incident command is also vital, in terms of understanding who is in charge and who should be in charge of the responses to an event.

Three Pillars of Disaster Recovery

Julie Cartwright, director – remittance strategy and operations at US telecommunications giant AT&T, shared her experiences of putting a disaster recovery plan in place.

AT&T processes over 11,000 items of approximately US$360m every month, so contingency planning is critical for this scale of operation. In 2007, the company began a consolidation of treasury, which included implementing a global disaster recovery plan. Cartwright made the point that, when you embark on international contingency planning, it is important to remember that there are different rules in different countries, and treasurers must ensure that they comply with all local regulations.

What works in the US may not necessarily work in India, for example.

AT&T’s global disaster recovery strategy has three key strategic pillars: 

  1.  Multiple banking partners in each region. 
  2.  Each country entity has both a local currency and US dollar account. 
  3.  Personnel are cross trained to back up each other, and have access to all countries in the biller. 

While treasurers cannot plan for all unexpected events, experience is key to understand the impacts to the business. This can be achieved through training. ADP’s Walle advised that those attending the session should be constantly looking at what they could be doing to plan for contingency events through rigorous testing and maintenance.

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