Financial Update (January-March 1999)
Financial Update (January-March 1999)
Fed Hosts Y2K Contingency Planning
perational contingency planning for the Year 2000 took center stage in December at a satellite teleconference sponsored by the Federal Reserve for domestic and foreign bankers operating in the United States. The teleconference gave participants an opportunity to ask questions of a panel of Federal Reserve System officials who are responsible for the Fed's Y2K activities. In addition, the teleconference provided firsthand information on Y2K operations contingency planning issues.
Federal Reserve Readiness and Contingency Planning
Edward W. Kelley Jr., Federal Reserve governor, opened the teleconference with a status report on the Fed's readiness activities. According to Kelley, the Fed has met all of its project goals to date by completing inventory of software and hardware, moving through remediation and testing of mission-critical systems and, in June of 1998, opening the Century Date Change Customer Testing Facility, a network within the Federal Reserve that offers testing for Fed systems and software.
Paul Connolly, century date change coordinator for the Fed's financial services policy committee and first vice president of the Federal Reserve Bank of Boston, discussed how the business areas of the Fed have been preparing for Y2K and outlined the major stages in the Fed's contingency planning. Those stages include renovating, testing and certifying Fed systems; extensive testing with institutions connected electronically with the Fed; developing business resumption plans; testing contingency plans using various Y2K scenarios and then improving the plans based on the test results; and creating plans for managing the actual transition to the Year 2000.
Bruce Summers, director of Federal Reserve Information Technology, explained the Fed's operational goal for Y2K contingency planning, which is to ensure that its business units continue to function normally during the rollover to the new century. To reach this goal, the Fed is concentrating on systemic operational risk and event management by adapting existing contingency plans and engaging in extensive testing.
Procedural and Management Controls at the Fed
Elaine Geller, an assistant vice president of Federal Reserve Information Technology and a member of the century date change business resumption work group, outlined the procedural and management controls the Fed has in place. The Fed has examined information security controls, data backup and archiving procedures, and the effectiveness of current contingency response actions. She indicated that the Fed's business units and their technical support staff are taking extra precautions to ensure that the Fed has access to all of its critical information and that the Fed's automated systems have integrated checks to validate the accuracy of the data. Staff have identified alternative methods of receiving and sending data. Staff are also conducting an inventory of all of the Fed's automated systems — computer, electronic and telecommunications — and testing backup systems to make sure these systems are current and functional.
The Fed plans to keep customers and consumers informed — through press releases, circular letters and Century Date Change Bulletins — about Y2K issues throughout the century transition period.
Continuous Service of Power and Telecommunications
The banking industry is greatly concerned about the plans of electric power and telecommunications industries to continue providing services through the century date change transition. Stephen R. Malphrus, director of the division of information resources management at the Federal Reserve Board and a member of the President's Council on Year 2000 Conversion, explained the steps that organizations in these industries have taken to ensure that power will be available and telephones will be working on Jan. 1, 2000.
The North American Electric Reliability Council, the trade group responsible for the electric power industry, was represented at the President's Council on Year 2000 Conversion summit meeting in December 1998. At the summit, members of over 30 associations in the financial sector heard from the power and telecommunications industry that all of that industry's major companies have active Year 2000 programs with good management support.
In telecommunications, two technical consortiums are performing industry Y2K tests. Additionally, the Network Reliability and Interoperability Council (NRIC), the organization the Federal Communications Commission (FCC) chartered to coordinate industrywide preparations, will review the testing done by technical consortiums and large companies. The NRIC will also coordinate the collection and dissemination of information to the public, advise the FCC on the status of industry readiness and coordinate the development of industrywide contingency plans.
The panel emphasized that depository institutions should inform their customers and contribute to a reasonable understanding of Y2K issues in their local communities. Panelists urged depository institutions to test all software and hardware until they are comfortable that everything will work well in the transition to the Year 2000. The panel also reiterated that the Fed will not close under any circumstances related to Y2K.
Tapes of the satellite teleconference are available for depository institutions that were not represented at the event. To request a tape from the Atlanta Fed, contact Jean Tate at (404) 498-8035.
|Year 2000 Readiness Disclosure|