Y2K - making progress
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Challenges rarely arrivé singly. More
typically, they come in clusters - all
of which we have to address at
once. For example, as we start to
come to grips with the outcome and
implications of our far-reaching
internal strategie review, we are at
the same time moving into the last
and most decisive phase leading
towards our transition into a new
millennium. With so many balls in
the air, it is obvious that we cannot
afford to become distracted or to
fall into a false sense of
complacency. The next quarter
promises to be a demanding one -
on all fronts.
Overall compliance
Tremendous effort
Critical needs
Severe disruption
While hearing this in mind, we can
report significant progress on the
millennium project, at least insofar as our
level of preparedness on the information
technology (IT) side is concerned. As most
readers will he aware, the root cause of
the Y2K issue, sometimes referred to as
the 'Millennium Bug', relates to the inca-
pacity of some older computers, chips,
and software systems to recognize the
year 2000 as a valid date. When unmodi-
fied systems encounter such dates - for
example in business contracts - they will
often simply crash. Thus, since we depend
on computers, and since these systems are
often joined together into elaborate net-
works, the Y2K weakness has momentous
implications for individual companies and
financial institutions, and indeed entire
electronically networked economies,
because it renders all of them vulnerable
to potentially serious disruption.
In the early phases of our coming to grips
with these challenges, the first priority
was to ensure that our internal systems
and applications were individually and
collectively certified 'Y2K-proof'. After
what can only be described as a prodi-
gious effort, our goal of overall IT, infra-
structure, and telephony compliance was
finally achieved for R1 last month, bring-
ing us in line with regulatory and manage
ment mandates. This was a considerable
achievement for all parties involved.
However, as our millennium project man
ager Hans Reusch points out, 'we must be
acutely aware that IT is only a part of the
overall millennium picture. There is an
overarching goal, which is to ensure the
continuity of our business, and to preserve
the integrity of our customer relation-
ships. As we all know, the cliënt stands at
the very center of our attention. So it isn'^
enough to achieve IT compliance: we neeol
to make sure that every aspect of our
business - particularly as it relates to serv-
ing our customers - is equally prepared for
the millennium. This will involve tremen
dous effort in the coming weeks, and will
make real demands 011 everyone in the
bank from the humblest clerical levels
straight through to top management.'
Two key streams of planning have been
clearly established: Business Continuity
Planning (BCP) and Transition Period
Planning (TPP). The former revolves
around making sure that the crucial com-
ponents of our business are intpervious to
any IT-related millennium disruptions,
and that we can deliver our key products^
and services to our core customers under
any circumstances. This requires that we
anticipate and plan for a wide range of
contingencies: everything from electric
power disruptions to a failure of our Com
munications infrastructure, our computer
systems, and indeed client-related calami-
ties as well. It means making absolutely
certain that we have appropriate backup
scenarios for each of these situations. It
involves clearly identifying which clients,
products and services are 'essential',
establishing what systems are critical to
meeting these essential needs, ranking our
business counterparties according to their
perceived Y2K compliance, and also
potentially reassessing allowable limits on
credit exposure.
A concrete example will bring this to life:
while Rabobank like most multinationals
