A Different Kind of Financial Meltdown

It was big news, if not exactly a big fire. Indeed, the blaze that broke out in the Country Bank headquarters building in downtown Ware last month was extinguished quickly, with only significant smoke damage. But the fire provided a stern test of the bank’s emergency preparedness and response systems — a test that was passed with high scores and also some important lessons for companies in all sectors

Paul Scully grabbed his desk calendar, flipped it back a page, and tapped his finger on one of the appointment-filled boxes.

“November 19th, two days before the fire, we had a fire drill,” said Scully, president and CEO of Ware-based Country Bank. “I remember … it was really cold and quite windy; everyone was miserable standing out there. They were saying, ‘whose idea was this?’”

A few minutes later, he flipped the calendar back another page, scanned it, and quickly found the notation he was looking for. “October 26th … that’s when we had our annual mock disaster drill,” he noted. “I’d say that if we were going to have a serious emergency, our timing was pretty good.”

Indeed, but this nearly 160-year-old institution had much more going for it than timing as it responded to what would have to be considered a minor, albeit quite smoky fire late in the afternoon on Nov. 21 at the bank’s headquarters in downtown Ware. It had procedures, preparation, redundancy, excess capacity, and, ultimately, nearly flawless execution that kept the bank open and running, and without the loss of any data stored in its system — or any momentum.

All these are things that banks plan for and pay a high price for — a byproduct of the Y2K-9/11 double-whammy — but most have never used them for anything approaching a real emergency. And crossing over that line is eye-opening, and also a little bizarre.

“The surreal part of all this is that, with all the planning and the significant sums of money that are put into disaster-recovery efforts, you just think you’re never going to really need them,” Scully said. “That was the part where you say, ‘wow — not only are we prepared for it, but this really can happen.’”

The bank also had some extremely high standards set by its so-called Disaster Recovery Team, which had every facility but the main office (due to be closed for several more weeks as the building is cleaned and renovated) handling business as usual at 9 a.m. on the Saturday after the fire, “and wouldn’t have been content with anything less,” said Scully.

“To say that we could have a fire on Friday night and that it will be OK if we don’t open until Monday morning simply wasn’t — and isn’t — acceptable to this group,” he said. “They’re the ones who said, ‘we don’t want to cause any disruption in services to anyone.’”

And the institution had what just a few weeks ago would have been considered “luxuries” for most companies, said Scully, who used that term to describe the roughly 44,000 square feet of space in an old ice-skate-manufacturing facility just a few hundred yards from the main office that the bank began leasing a few years ago, as well as dozens of spare computers it happened to have on hand as part of its disaster-recovery plan.

There are important lessons to be taken from all this, not only for banks, but all companies, said Scully, noting that preparation, planning, and redundancy — to the extent possible — and not good timing were the real keys to successfully handling this incident.

“This provided a really good lesson for a lot of businesses who probably don’t do this,” said Patti Mitchell, the bank’s longtime director of Marketing. “Things went like clockwork here, and that wasn’t by accident; people knew exactly what to do and when to do it. If we hadn’t planned for something like this, people would have been going in every direction, not knowing what to do.”

In this issue, BusinessWest recounts the events of Nov. 21, but also explains why what came long before that afternoon is the real story of the fire at Country Bank.

Taking the Heat

Scully was just leaving the bank’s East Brookfield office after a meeting with staff there when he got the call.

“My first response was, ‘define fire,’” he said when recalling his reply to the human-resources administrator who reached him on his cell phone with the news. “I was asking her, ‘is it a big fire, a little fire? What?’”

The person at the other end didn’t know — she wasn’t on-site, either — but would endeavor to find out. By the time Scully reached downtown Ware, only to be trapped in a massive traffic jam that resulted when the police shut down Main Street, he knew that this wasn’t a fiery blaze — caused, he would learn later, by a malfunction in a small stove in the facility’s basement-level break room — but did produce vast amounts of thick black smoke.

“The cinderblock walls produced an oven-like effect,” he explained, adding that there was a good amount of heat and smoke that caused damage estimated at anywhere from $500,000 to $1 million.

When he finally arrived at the landmark building at the corner of Main and Bank streets, Scully could only stand outside, watch, and wait for reports — the most important of which came more than an hour later, when fire officials would confirm that everyone who could have been in the building — employees, contractors, vendors, and anyone else — when the fire broke out was accounted for and uninjured. (The blaze broke out after the bank had closed, so there were no customers inside at the time.)

The fire was big news in Ware — the local weekly, The Ware River News, devoted its entire front page to the incident — due primarily to the size of the company involved (the bank is one of the largest employers left in the community), the historical nature of the building (it’s been a bank for more than a century), and the commotion it caused. However, the damage was fairly minor, and most customers who don’t live in Ware or read its local paper didn’t even know there was a fire.

And this, said Scully, is how things should be, and how one can measure just how effective all the planning and response systems ultimately were.

Elaborating, he returned to the fire scene and his first thoughts after verifying that no one was injured. “I was thinking, “we have to open in 14 hours!” But by the time these thoughts were being processed, people working behind the scenes had already made sure the doors at the institution’s 13 other locations would open as scheduled.

This feat requires that all computer-operated systems remain functional via a back-up system at a remote location — in this case the leased space in the former American Athletic Shoe complex along the Ware River — and also having the physical space for people to perform their work.

“You need to have the capacity to accommodate a significant number of additional people,” he explained, “so that not only could we operate all of our satellite operations, but if a facility like the main office was involved, all of those people, all of whom have important work to do, can be doing that work somewhere else.”

The bank’s disaster-response plan sets down a series of steps to ensure the continuance of operations, said Scully, and there is continual practice carrying out these steps, especially at the annual disaster drill.

“We identify all the critical tasks,” he explained, “meaning answers to the questions, ‘what has to be in this amount of time?’ ‘What needs to be in 12 hours, or 24 hours?’ And we rehearse all this.”

Burning Issues

Such practice pays off, he continued, as evidenced by how coolly and calmly the disaster-recovery team went about its work.

“Had someone been in the room when we set up the command site, they wouldn’t have had a sense, based on the emotional level in the room, that we were in the middle of a fire — other than the fact that we all smelled of smoke,” Scully explained. “A few of our board members showed up and said that it was obvious that people were in total control, that they knew what their assignments were and they were executing them.”

As he replayed the events in the hours and days after the fire, Scully said there were a number of factors that contributed to a quick, effective recovery and a tally sheet that the bank’s president described this way: “customer impact: none; staffing impact: none; concerns about any lost business: none, because you were able to accommodate all that.”

He said the bank’s decision to lease significant space in the former mill and create what it calls an ‘operations center’ was certainly one such factor. That square footage provides the institution with far more space than it needs — or needed until a few weeks ago.

“We’re using every bit of that space now,” he said, noting that roughly 90% of those who were working in the main office when the fire broke out were behind desks and computers at the operations center on Monday morning — and working.

And everything is functioning so normally that there is absolutely no rush to reopen the doors of the headquarters building. “We’re looking forward to getting back in,” said Scully, “but the interesting part is that, when we moved into this building, we built it out to accommodate future growth; we just didn’t know the future growth was going to happen overnight.”

Timing was also a factor, he said, noting those aforementioned drills, and even evolution played a part — as in the evolution of banking and technology. There is far less paper being used in all banks today, he explained, and there’s even less cash in the vault because of the widespread use of debit cards.

But effective planning was the real key, he continued.

Scully said he has a number of qualitative and quantitative measures for how well his bank handled its adversity. The number of people who didn’t know about the fire is one he likes to cite. Another is the fact that 25 bank employees were scheduled to show up the Sunday after the fire and help decorate Main Street for the holidays — and all of them made it.

“That’s an indication of just how much it was back to business as usual,” he explained. “Everyone was there.”

Not every business can lease 44,000 square feet of mostly extra space sitting in case it’s needed, he said, and not every business can have closets full of spare computers handy in case a smoky blaze prompts the relocation of dozens of workers.

But there are steps that each and every business can and should take to prepare for an unexpected incident. If one actually occurs, the experience may be surreal, as Scully described, but it won’t be, well, a disaster.

Banking on It

When asked what lessons the bank took from its ‘disaster,’ Scully joked that the renovated break room will likely be outfitted with simply a microwave.

Beyond that, he said, the company can take a good dose of reassurance that the money it has spent on redundancy, disaster preparation, and disaster response — much of it now legislated — is certainly money well-spent.

Businesses not as tightly regulated can learn from this as well. And the ultimate lesson is that they shouldn’t wait for a disaster to prepare for one.

George O’Brien can be reached at[email protected]