Biting back against the Y2K bug
millennium
new publication
8 What'sNewS Issue 1 January 1999
The recent months leading up to the successful introduction of the euro, the
common European currency, have been challenging for many members of our
bank. They have made particular demands on the attention of our technology
advisers as well as our front and back office professionals - all of whom found
themselves thrust onto the front line. In the meantime, however, the doek has
been ticking on yet another and potentially even more challenging issue - the
so-called millennium bomb - one that will intimately affect virtually every
member of the Rabobank team.
Bracing ourselves
Facing demand
Global connections
Problem's potential
Ultimate challenge
Shared issue
The problem sterns from a seemingly
negligible glitch in the design of
certain computer hardware and software
systems that renders them incapable of
recognizing the year 2000 as a valid date.
A vast number of electronic-based systems
are vulnerable to this millennium, or Y2K
(Y=year, 2, K=1000) problem. Of course,
some of these systems can be
reprogrammed; however, they remain
vulnerable to that cardinal rule of
software design which states that new
difficulties inevitably emerge whenever
programmers try to adapt existing
software codes to deal with the old ones.
At the same time, many other systems
depend on so-called 'embedded circuits',
which are computer chips whose
instruction-sets are irremediably 'burnt in'
and cannot be repaired. Staggering as it
sounds, it is estimated that there are five
times as many of these embedded chips in
use as there are human beings living on
the planet. These chips are crucial to the
efficiënt continued operation of elevators,
security systems, switchboards, and fax
machines; they affect medical equipment,
Hot offthe press from
the London research
department is the
Economie and Financial
Quarterly (Global
Economics). Copies are
available (free of
charge) from either Amanda Schoeman or
Brigitte Krijbolder on fax +44 171 334 9198.
logistics systems, power generation, and
numerous other functions essential to the
wider economy.
Thus, a seemingly minor bug has the
potential to paralyze key sectors of world
commerce during the period leading up to
and beyond the first of January in the year
2000. With this all-important transitional
date now less than 12 months away, we
need to mobilize ourselves for a new, all-
out effort to minimize the risks and ensure
operational continuity in the (now-
mainly) electronic environments in which
our business takes place. The essential
purpose of the millennium program is to
insure the continuity of our business.
While the challenges associated with the
millennium issue are by now widely
appreciated among businesses, bankers,
and national regulatory authorities, it has
also become equally clear for a variety of
reasons that many organizations have left
their response until too late and that they
will simply be unable to attain
millennium compliance in time. For them,
it will be a matter of identifying
absolutely business-critical systems and
addressing their perceived vulnerabilities
as a matter of highest priority. A failure to
do so poses the risk of a company going
out of business - temporarily or indeed
even permanently.
To add to the difficulties, initial
assessments of millennium risk have
generally tended to concentrate on the
degree to which internal systems are
individually immune from potential
disruption; however, in an electronically
networked economy where the computers
of one company inevitably talk to those
of the next, another more serious class of
risks and vulnerabilities stem from the
sheer breadth of this global inter-
connectedness. This interconnectedness
lies behind an estimate by the
GartnerGroup, respected global
technology consultants, that total Y2K
costs could rise to as much as USD 1
trillion world-wide.
The purpose of this article is not to
exaggerate the risks of this issue but
rather to underline the scale of the
potential problem and stress that it is
one in which every Rabobanker will
have to become intimately involved. It
will take an immense amount of work to
ensure that we are 2000-compliant.
Offices throughout the network have
already put a lot of effort into risk
assessment and into upgrading, testing,
and implementing systems in time. The
general manager of every office is
responsible for the millennium
compliance of his office; the central
millennium team of global IT is there to
offer support to the general manager.
Rik van Slingelandt (acting chairman of
(RI) Rabobank International), while
taking note of the 'daily struggles'
associated with the euro conversion as
well as ongoing system implementations
like OPEX and investment banking
systems, nevertheless stressed in a recent
memo that 'the millennium program is the
ultimate challenge. Because of the
irreversible deadline no escape is possible
and we have to be properly prepared. Our
analysis of the status of this program
within RI on a global level, at the head
office, and within the offices themselves
leads us to the conclusion that a lot more
work needs to be done.'
One first step was the nomination of a
special overall program coördinator for
all millennium-related issues. Harrie
Paulissen is a 10-year Rabobank Group
employee and, together with his central
