Weathering the Storm:
How Credit Unions Can Be Prepared
When Disaster Strikes

A Growing Threat

Nationally, over the last 40 years, the U.S. has seen a significant increase in the number of billion-dollar weather and climate disasters in the U.S. According to NOAA’s National Centers for Environmental Information (NCEI), in the 1980s, these large-scale disasters averaged about 3.3 annually. Beginning in 2014 through 2023, that average jumped to more than 17 per year. In 2024 alone, there were 27 individual weather and climate-related disasters with at least $1 billion in damages recorded.

Credit unions aren’t immune to the rising threat of these natural disasters which can include hurricanes, wildfires and severe storms. Research from the National Credit Union Administration (NCUA) shows that approximately 25% of federally insured credit unions are located in areas classified as having a relatively high or very high risk of natural hazards. Collectively, these credit unions accounted for more than a third (34%) of assets across the NCUA system, totaling more than $750 billion as of 2021, a figure that has continued to increase.

Credit unions most at risk are predominantly situated in coastal states including California, Texas and Florida. However, 2024’s deadly Hurricane Helene illustrated the true unpredictability of Mother Nature with severe damage extending far inland, particularly in North Carolina.

For credit unions whose members rely on uninterrupted access to their services, the need to ensure resilience and redundancy in coverage brings unique problems that require specific solutions.

Strategies to Weather the Next Storm

To mitigate the risks of natural disasters and minimize their impact on members, credit unions—especially those located in high-risk areas—should take a proactive and multi-layered approach.

Here are 9 key strategies credit unions can take to ensure they are prepared to weather the next storm.

1. Develop multiple, cross-functional plans.

   To meet the goal of strengthening business continuity in the face of an outage, it’s important to ensure there is a master disaster recovery plan that includes distinct roadmaps across various departments and operations such as online banking, mobile apps, member communications, call centers and back-of-house operations.

2. Leverage the cloud.

   Use a cloud-based platform that is less likely to be affected by localized physical outages. Outsourcing to an enterprise application cloud-based provider ensures a credit union can leverage the provider’s more robust infrastructure, processes and operational expertise in order to quickly deploy a disaster recovery solution for replication of their mission-critical applications in the event of an emergency. Enterprise applications for SwitchThink clients, for example, are protected and managed in SwitchThink’s dedicated, private credit union cloud which replicates in near time between two geographically distant data centers so that clients are prepared when an interruption—of any size—occurs. The cloud-based back-up doesn’t interfere in the credit union’s ability to manage its day-to-day operations and, in fact, it enhances it. Clients’ members typically never know there is a local outage at a client’s corporate network, and core connectivity to online banking is resilient to environmental outages.

3. Use data centers in low-risk areas.

   Protect member data and funds by using redundant, geo-diverse data centers—ideally located in low-risk natural disaster areas—in order to safeguard member information and transaction data. If a credit union’s data center is in a high-risk area, consider outsourcing primary and/or back-up data center resources with vendors that are intentionally located in areas less likely to be affected by natural disasters. For instance, SwitchThink has two geographically distant, PCI-compliant facilities in low-risk areas that are built to Tier 3 standards, are SOC 2 compliant, and guarantee 100% availability for power and cooling. This allows SwitchThink’s Disaster Recovery solutions to ensure its credit union clients’ core functions and other mission-critical applications are protected and able to quickly cutover without any downtime.

4. Shore up cybersecurity.

   It isn’t just physical operations that can be vulnerable during a national disaster. Cybercriminals prey on the chaos created by outages to target vulnerable employees and members. When defenses are down, cybercriminal success rates rise with attacks such as ransomware and information-stealing malware. These events can trigger cyber security breaches. For maximum security the infrastructure must have redundancy and layers of defenses. The key to cybersecurity planning is to develop a master cybersecurity playbook that includes detailed roadmaps based on specific threats.

5. Regularly review and audit insurance coverage.

   It’s vital to maintain comprehensive insurance coverage and financial resilience contingencies in order to be prepared for a catastrophic event. Ensure the credit union has property, liability, cyber and business interruption coverage that reflects natural hazard risks. Also critically important is the need to have a liquidity contingency plan that will provide capital availability for member withdrawals and emergency loans.

6. Conduct a physical-location natural hazard audit.

   As part of disaster recovery planning, assess risk by physical branches, offices and data centers using GIS mapping to overlay these physical structures with FEMA-designated disaster-prone zones. This exercise will help identify high-risk concentrations and inform priorities for branches and members in coastal areas, wildfire zones and floodplains. Assessing the risk to physical structures will enable more informed planning for upgrading branches in high-risk zones with storm-resistant architecture, backup generators and redundant communication lines.

7. Practice, practice, practice. 

   Commit to an ongoing timeline for regular disaster simulations. Plans on paper don’t always play out the same in real life so it’s important to simulate disaster scenarios in order to test protocols for operations, systems, staff readiness and communications, both with staff and among members.

8. Don’t wait to communicate.

   Create contingency communications plans for members and stress-test the plans on a regular basis. This should include not only what and how members will be communicated with in the event of a disaster, but also year-round communications that educate and encourage digital engagement which is less likely to be affected during an outage. For example, promoting enrollment in e-statements, ACH deposits and electronic card alerts will reduce reliance on physical mail and branch visits that could be interrupted during an event.

9. Ensure staff are trained and prepared.

   Equip staff with protocols and communications tools so they are prepared to serve members effectively during a crisis, particularly in low-income or underserved communities. Encourage employee participation in local community disaster drills; invite emergency responder teams to present to employees and help educate them on disaster preparedness and response; and establish an internal employee task force—or multiple task forces across numerous locations—to manage implementation of disaster recovery plans and crisis communications.

Natural disasters are not just environmental events—they can be major financial disruptors. For most credit unions, the resources required to prepare and implement the latest in disaster recovery, including cloud-based operating systems, are difficult to do alone. Instead of guessing at best practices and trying to allocate internal resources for these important disaster preparedness functions, forward-thinking credit unions understand how working with a third-party provider can supplement their own internal resources, saving time and money. This frees up staff to manage more critical functions that can’t be outsourced. Credit unions that prioritize operational resilience, cloud-based security, and member communication will be best positioned to maintain trust, continuity and community impact when disaster strikes.