Disaster Preparedness and Management

Presentation by:Mr. Rogelio A. Encinas

Manager II/HeadMicrofinance Examination GroupSupervision and Examination I

Bangko Sentral ng Pilipinas

Definitions

Disaster Management – “an applied science that seeks by systematic observation and analysis of disasters, to improve measures relating to prevention, mitigation, preparedness, emergency response and recovery”. (Stuart Mathison, Foundation for Development Cooperation, September 2003)

Definitions

Disaster Mitigation – “measures aimed at reducing the impact of a natural or man-made disaster on the community or nation; and the application of these measures to moderate or reduce the effects and impacts of current, or future disasters”.

The Disaster Cycle

Disaster Response Rehabilitation Reconstruction Development Prevention Preparedness

Economic Coping Mechanisms

“Low-stress” “Medium-stress” “High-stress”

“Low-Stress”

Stopping regular saving Reducing consumption Short-term migration of one or more family

member Borrowing from relatives and neighbors

“Medium-Stress”

Using up savings Selling non-essential household assets Borrowings

“High-Stress”

Selling productive assets Loan default

Impact of Natural Disasters on Banks Decline in inflow of cash Increase in outflow of cash Significant loss of capital Serious liquidity crisis

Business Continuity Plan (BCP)

Objective Ensure minimal disruption of bank operations Minimize financial losses through lost

business opportunities or asset deterioration Ensure timely resumption of normal operations

Coverage Fire, Earthquake, Floods, Typhoon, Lahar,

Political instability

Key Teams in BCP

Emergency Action Team Ensures that people are safe

Damage Assessment Team Contacts people/agency who will decide if situation is

really a disaster

Emergency Management Team Ensures the following:

Retrieving critical and vital data from off-site Installing and testing systems Purchasing hardware/software Operating from the system recovery site

BSP Relief Programs

Exclusion of arrearages of borrowers from the computation of past due ratio

Grant of emergency loan Lifting of sanctions on and allowing the

booking of allowances for probable losses on staggered basis for 5 years from approval date

BSP Relief Programs

Lifting of sanctions and allowing the booking of valuation reserves on non-performing assets and real and other properties owned or acquired on a staggered basis for 5 years from approval

Temporary suspension of reports to BSP and lifting of monetary penalties for non-submission and delays in submission of mandatory reports

BSP Relief Programs

Moratorium and waiver of penalties of monthly payments to BSP for banks with ongoing rehab programs

Waiver of penalties on legal reserves deficiencies

BSP Relief Programs

Reduction of the 5% general loan loss provision to 1% for restructured loans

Restructuring of outstanding rediscounting obligations

Freezing of credit classification status of loan accounts for purposes of determining and booking loan loss provision to enable banks with rediscounting line to continue rediscounting and avail of liquidity assistance

BSP Relief Programs

Postponement of ongoing or rescheduling of bank examination for those units whose fixed office facilities, records and equipment were disabled

Recovery Efforts/Actions Taken by Banks After the Disaster Restructured regular and microfinance loans

to ease the pressure on the borrowers suffering from effects of typhoon

Waived penalties on regular and microfinance loans

Granted three-month moratorium on the payment of microfinance loans

Accepted partial payments on principal or interest payments only on matured loans

Major Concerns of Banks After the Disaster Banks need additional financing to provide

liquidity to normalize lending operations Increase in loan-loss reserves requires banks

to apply for the staggered booking of valuation reserves to ease impact on capital

Need for liquidity assistance from external sources

Losses from calamities not covered by insurance

Thank You.