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Data & Analytics

4 minute read

Is Your Collections Department Prepared to React to the Next Hurricane or Weather Catastrophe?

Sep 25, 2019

Written by: Spinnaker Team

If your customer is in the throes of a major hurricane, is it the right time to attempt collections?

With above-normal tropical activity predicted in both the Atlantic and Pacific for 2019 — and hurricane seasons on both coasts extending through November 30 — now’s the perfect time to ask: Is your collections department prepared to react to the next hurricane or weather catastrophe?

Hurricane Dorian, a category 5 storm and the first major hurricane of the Atlantic hurricane season, recently slammed into Puerto Rico and the Bahamas and up the East Coast. And just last week Tropical Storm Imelda drenched East Texas, causing disastrous flooding.

One year ago, Hurricane Florence flooded the Carolinas with record-setting rainfalls, devastating entire communities. A few years prior, 2015’s Hurricane Harvey ravaged areas of Texas and Louisiana, earning the top spot as the costliest on record — tied with 2005’s Hurricane Katrina, which caused catastrophic damage in Florida and Lousiana.

But it’s not just hurricanes you need to worry about. Just last year rain triggered terrifying mudslides in Montecito, California, as well as destructive flash flooding in Ellicott City, Maryland. For years, scientists have warned a major earthquake is looming for California. And who can forget last year’s California fire season, which was the worst in recorded history. The state’s fall Camp Fire was the most destructive and of all time, destroying more than 13,000 homes.

Just as individuals and communities focus on preparedness, it’s critical your collections department is also ready to react and respond to challenges from severe weather like hurricanes, as well as floods, fires, and other natural disasters. Collections operations need detailed playbooks and continuity plans in place should the weather or other disasters have a major impact on your customers.

When a catastrophic event occurs, your collections department will need to put a halt to normal activities and put your playbook into action.

Getting Ready: Your Collections Department Catastrophe Readiness Playbook

If you need to create a catastrophe readiness playbook — or if your current version needs some updating — here are a few tips to keep in mind:

Start With Robust Planning

Be proactive! All preparation — from strategy development and testing all the way to training — should be done well in advance. You’ll need to focus on achieving consensus from all stakeholders around acceptable risk management, setting the appropriate risk tolerance, and ensuring you have appropriate governance and oversight in place. In addition, develop fully approved and tested customer relief programs and offerings you can launch when needed. Finally, plan for the creation of detailed dashboards and reporting tools, plus clear communication strategies for customers and employees to keep everyone aligned on new processes and priorities. When catastrophe strikes, you need to be ready to react — there’s no time to chase down final stakeholder approvals or start testing solutions.

Stay Tuned In Pre-Storm

Don’t be caught off guard. Weather trackers give you a heads-up as to what weather may be coming, allowing you time to mobilize and gauge the anticipated size of the impacted area. Communication is vital — communicate regularly, primarily at key decision points where there are potential impacts to both customers and employees. This is also a good time to double-check that all of your documentation, approvals, and governance is in order. You don’t want any loose ends! As you stop outbound collection attempts, you may see an increase in inbound volume, so be mindful of capacity and coverage. What can employees expect? What customer areas will be affected? Keep communicating!

Stay Connected and Adjust Post-Storm

Be flexible. When the storm subsides, you must decide when to resume collection operations. Keep in mind this may still be a difficult time for your customers — you’re here to serve them in both good times and bad. Make adjustments to your call model to demonstrate empathy, and guide your customers with confidence and a willingness to offer support. Stay connected to your customers and monitor their reactions and needs in all channels, through customer service feedback as well as on social media. Make adjustments to process or communications as appropriate. Keep a close eye on reporting for impacted areas that highlight instances where performance varies from the norm, or of other similar experiences, and, again, make adjustments where needed. Refer to your playbook to deploy the best strategy.

Top 9 Questions to Ask When Creating or Updating Your Collections Department Catastrophe Readiness Playbook

We’ve created a list of common questions to guide you, whether you’re updating your current collections department catastrophe readiness playbook or creating a new one. Keep in mind, your plans should be adjusted on an ongoing basis, so you can continue to iterate the plan to be reflective of actual experiences as well as changes in people, processes, and technology. Don’t just set it and forget it!

  1. How are you identifying and discovering potential disasters? Is it manual or automated?
  2. When a disaster strikes your customers, do you know how to respond? Where and how will you suspend contact, and when will you resume?
  3. Who decides which disasters are important? When and how should your contact strategies change?
  4. Do you have a single set of clear, comprehensible, and actionable instructions to communicate?
  5. Will everyone be on the same page, following the same rules, and accurately implementing your customer care policy to the letter?
  6. How will you manage staffing levels when you suspend activities? Do you have an alternate plan to keep employees engaged and productive?
  7. Have you identified reputational risks and developed strategies to address and respond to potential impacts from customers, employees, and the community?
  8. Are you able to identify all loans and investments significantly affected by the disaster and any potential loss exposure?
  9. Is management able to explain the disaster’s implications on the institution’s earnings and capital, as well as its effect on liquidity and other risk appetite measures?

Think about your answers to these questions. How would you rate your collections department’s ability to properly identify and manage these risks?

Now think about how your collections department reacted to the last disaster. Are you satisfied with the decisions that were made? Are you satisfied with customer sentiment and experiences?

If your collections department is not fully prepared to react to the next hurricane or weather catastrophe, or if you’re not satisfied with how you responded to the last one, now’s the time to get ready!

Final tip: Here are some sites we recommend for tracking and getting up-to-date information on weather and other natural disasters:

At Spinnaker, we’re experts at what you do. We know what it’s like to sit in your chair, because we’ve spent most of our career doing just that. Our Spinnaker team is made up of seasoned industry experts with decades of proven experience running and managing businesses just like yours. At Spinnaker, there’s no such thing as a “career consultant” in our ranks, just hardworking management-level individuals with deep first-hand knowledge of your business challenges and how to drive real results.