The true cost of unpreparedness

Disasters and interruptions can strike at any time, and credit unions that are unprepared can pay a high price. From cyberattacks to natural disasters, the threats are real and the potential consequences severe. 

In this article, we will explore the true cost of being unprepared for these events and provide tips for credit unions to create a robust business continuity plan that will help them weather any storm.

A high price tag

Disasters and interruptions can strike at any time, and the cost of being unprepared can be devastating. 

The financial impact of being unprepared is undeniable:

• Downtime costs the average company $5,600 per minute, according to a 2014 study by Gartner, and the cost is undoubtedly higher today. This means a single hour of downtime could cost a credit union hundreds of thousands of dollars.
• Cyberattacks are a growing threat to credit unions, and the cost of a data breach can be enormous. The average cost of a data breach in 2023 was $4.45 million, according to IBM. This includes the cost of investigating the breach, containing the damage, and notifying members. 
• Natural disasters can also have a devastating impact on credit unions. The National Oceanic and Atmospheric Administration reports that 2023 had the highest number of billion-dollar disasters: 28, costing $98.7 billion. These disasters can damage or destroy credit union property, disrupt operations, and make it difficult for members to access their accounts. 

Credit unions’ vulnerability to cyberattacks

Credit unions are an attractive target for cybercriminals because they hold sensitive financial information. The financial services industry is one of the most targeted industries by cybercriminals, and credit unions are particularly vulnerable due to their often limited resources and expertise in cybersecurity.

In 2021, there were more than 5,000 reported data breaches in the U.S., and the financial services industry was the most targeted sector. Credit unions accounted for a significant portion of these breaches, with more than 1,000 reported incidents.

In addition to direct financial losses, a cyberattack can also damage a credit union's reputation and lead to a loss of trust among members.

Natural disasters as a growing threat

Natural disasters are a growing threat to credit unions, as the frequency and severity of these events have increased in recent years. Hurricanes, floods, wildfires, and earthquakes can all cause significant damage to credit union property and infrastructure, disrupt operations, and lead to the loss of data. 

Natural disasters can also significantly impact members who may be displaced from their homes or businesses, and can’t access their accounts.

For example, in 2020, Hurricane Laura caused widespread damage to credit unions in Louisiana and Texas. The hurricane destroyed or damaged hundreds of credit union branches, and thousands of members were left without power or access to their accounts. 

In the aftermath of the hurricane, credit unions were forced to spend millions of dollars on repairs and recovery efforts.

Credit unions need to take steps to prepare for natural disasters and protect their employees and members. This includes developing a disaster recovery plan, backing up data, and training employees on how to respond to emergencies.

Business continuity planning can reduce costs

Business continuity and recovery planning is a critical component of any credit union's disaster preparedness strategy. A well-documented business continuity plan outlines the steps your credit union will take to respond to and recover from disasters and interruptions. 

By having a plan in place, your credit union can minimize the impact of these events and continue to serve its members.

Your business continuity and recovery strategy should include procedures for safeguarding member data, maintaining access to critical systems, providing alternate workspaces, and communicating with members and staff. It should also be tested regularly and updated to ensure that it remains effective.

A business continuity plan:

• Reduces downtime by ensuring that you have a plan in place to quickly restore operations in the event of a disaster.
• Improves your credit union's reputation by demonstrating to members and stakeholders that you’re prepared for anything.
• Increases member confidence in your credit union by showing that you’re committed to protecting their data and providing them with uninterrupted service.
• Reduces costs by minimizing the impact of disasters and interruptions on your operations.

If your credit union doesn’t have a business continuity plan with robust recovery solutions in place, now is the time to create this essential tool for protecting your credit union from the unexpected.

CANDICE LEARY HUMPHREY is communications director at Agility Recovery, a CSS alliance provider. This article is placed in partnership with Agility Recovery and CSS, and doesn’t represent the views of or an endorsement by America’s Credit Unions.