1. CASE SUMMARY
This case is used by the authors during an information assurance course taught as part of an accounting and information systems degree. It is presented during the portion of the semester when business continuity and disaster recovery is being covered. The intent of the case is to give students an opportunity to gain real world experience with a theoretical concept that can be difficult to comprehend fully. At the conclusion of this case, students should possess a greater understanding of the critical decision-making process that goes into analyzing and deciding what risks need to be dealt with as a part of a Disaster Recovery and Business Continuity (DR/BC) team.
This case is presented as a non-project based case (Cappel and Schwager 2002) and it is expected that students will utilize higher level cognitive skills as presented in the classic taxonomy of Bloom (1956). They will accomplish this by distinguishing relevant from irrelevant facts, developing alternatives and solutions, and applying concepts to a specific situation.
To accomplish the stated goal of this case, information from a fictional company, Bank Solutions, Inc., is provided. Bank Solutions, Inc. is a provider of item processing services to community banks, savings and loan associations, Internet banks, and small- to mid-size credit unions. Bank Solutions, Inc. needs to identify its operating and regulatory risks. A professional business team is hired to identify the risks and provide recommendations to mitigate the identified risks.
2. CASE TEXT
2. 1 Company Background
Bank Solutions, Inc. (a pseudonym), founded in 1973 by the First Presidential Bank, a major bank of its time, is a provider of item processing services (i) to community banks, savings and loan associations, Internet banks, and small- to mid-size credit unions. It offers a full range of services, including inclearing and Proof of Deposit (POD) processing, item capture, return and exception item processing, image archive storage and retrieval, and customer statement rendering.
Bank Solutions was formed in 1973 when the Chief Operating Officer of First Presidential Bank, a major commercial bank, recognized an opportunity. Since item processing functions are standardized (they have to be in order for originating and receiving financial institutions to clear customer transactions) and scalable with increases in item processing volumes, they were able to offer these services to other financial institutions wishing to reduce operating expense and focus on growth strategies and other core business functions. First Presidential marketed these services under the Bank Solutions brand name.
Over the next 15 years, Bank Solutions enjoyed modest growth. By 1988, it served 41 small- to mid-size financial institutions. It had not, however, developed a market presence outside of the Northwestern Region of the United States, as management had hoped. This was primarily because Bank Solutions was unable to compete with other item-processing service providers that had developed proprietary software systems considered "top of the line." To make matters worse, at the time almost one quarter of Bank Solutions' client base was saving and loan associations (saving and loans). As a result of the Savings and Loan crisis, 60% of Bank Solutions' savings and loan customer base failed over the six years spanning 1985-1991, thus stunting the outsourcer's growth. The related slow down of the financial services and real estate industries and the recession of 1990-1991 presented further headwinds to the growth objectives of First Presidential management. In 1994, First Presidential sold off Bank Solutions.
Under new management, Bank Solutions thrived. Keys to the company's renewed success included the following:
* The development of key strategic partnerships with other industry participants, including data clearing houses and financial institution core processing system outsourcers. …