Coronavirus Scenario Test Drive
March 13, 2020
6 minute read – By design, this scenario is complex. Keep in mind it is NOT a prediction. This scenario is only one of many possibilities and combinations of events that could occur.
Our purpose is to help people rehearse tomorrow today so that if similar futures or components of them arrive, decision-makers are better prepared.
If you decide to work through this, feel free to adjust the scenario to best suit your situation. If you would like help, please reach out. You can reach us at 800.238.7475 or email firstname.lastname@example.org.
Also, it is true that in every situation there is opportunity. Remember, you can make a difference with your mindset. Times of great uncertainty present opportunities for your institution to contribute in a meaningful way to the well-being of your members, employees, and community. Approach these issues with a determination to make a real difference.
Imagine it is April 10, 2020:
The impact of social distancing is taking its toll. The markets continue to go wild and rates continue to plummet, the 10-year Treasury rate is nearing 0 and Fed Funds target is 0 to 25 bps.
As a result, mortgage rates have continued to drop substantially causing a massive refi boom as consumers look to take advantage of the low rates. The credit union is experiencing an unprecedented rate of mortgage refi applications, not only from existing members but also new members.
The credit union also has several employees confirmed with coronavirus and others reporting signs of illness. Many of those reporting signs are in IT, the mortgage department, and the call center. The credit union is operating at ___% staffing capacity. Most of the staff is working remotely. Third parties that typically provide backup when call volumes get too high are slammed with calls as other financial institutions are relying on them as well.
To prevent spread of the virus, schools and daycare centers are shut down and people are being encouraged to stay home and maintain social distancing.
Supply chains continue to be impacted leaving stores and warehouses running low on inventory and basic supplies, so much so that food, water, and other critical supplies are being rationed.
Public transportation is limited. Taxi and ridesharing drivers are staying home for fear of catching the virus and because gasoline is being rationed. It is difficult for employees, credit union members, and other community members to get to typical destinations such as work, the store, the doctor, and the pharmacy. The elderly are especially hit hard because of the lack of transportation options.
Unemployment has increased as major events are still being cancelled, construction projects have been put on hold, restaurants and other service industries have reduced staff, and the gig economy is suffering immensely. Many hourly employees that are still employed have experienced severe reductions in hours.
Several of the key partners that the credit union relies on for dozens, if not hundreds, of updates every day for security, intrusion detection, spam, malware, antivirus, etc., are experiencing similar levels of contagion and are operating at partial capacity. Updates that would normally be issued within hours of identifying new threats are now taking days or even weeks. Knowing that defenses are weakened, the number of attacks is increasing exponentially.
Even the largest technology companies, such as Microsoft, are ill-equipped for the reduction of capacity and increased demand for assistance. While normally, they can be counted on to provide expertise in minutes to assist in diagnosing and/or resolving issues, now the credit union has to wait days or longer to gain access to qualified help.
Situation on June 30, 2020:
New coronavirus infections are beginning to slow and the CDC has announced more effective treatment protocols. Credit union employees have not had any new cases for the past 3 weeks. A total of ___ employees have contracted the virus since mid-April.
While unemployment initially increased as construction projects had been put on hold and restaurants and other service industries reduced staff, the unemployment numbers have been stable for the last 4 weeks. Hourly employees are also starting to see increases in their hours after having had them severely reduced. The stock market is still down, materially, from its high earlier in the year. Short- and long-term rates remain low and the yield curve is relatively flat.
Your credit union weathered the storm and is getting back to some sense of operating in a new norm.
While there are many questions to answer, here are a few to get you started. The questions are not listed in any particular order. As you work through them, you will certainly come up with lots of other questions. Document them as they come up.
- How are we defining success in this scenario?
- How would I want to show up as a leader in this scenario?
- What business opportunities can come of this future for our credit union?
- How do the decisions we are making today fit with our strategic plan and success measures?
- What are bad things that can happen to our credit union in this future?
- What are people feeling, wishing for, anticipating, or fearing? (Define people – employees, members, board members, community, 3rd parties, regulators, etc.)
- How do we see competitors responding to this future? Based on how we see our competitors responding, how might it impact what we need to do to remain relevant and competitive?
- What decisions could we make today for our credit union that would not harm us in this particular future?
- What other questions should we be asking?