10. Addressing the Year 2000 requires that every bank have an action plan. The complexity of the plan may vary from one bank to another depending upon size and the extent to which an organisation relies on outside vendors and service providers. However, even small banks with no internally developed applications must have a plan for dealing with the vendors and their equipment and systems with embedded chips. While individual organisations may have their own ways of describing their plans, one way to look at a good action plan is to think of it as consisting of the following phases. The specific actions to be taken in each phase are provided in more detail in Appendix B.

(a) Developing a strategic approach

11. This phase includes establishing Year 2000 as a strategic objective at the highest levels within the bank, developing a process to communicate the strategic objective throughout the banking organisation, and assessing the resource implications of the Year 2000 at a very high level.

12. At this time, organisations should be well past this phase in addressing issues.

(b) Creating organisational awareness

13. Making certain that the strategic importance of the Year 2000 as a business objective is understood and appreciated throughout the organisation may be the most important phase in the action plan. The recognition that the Year 2000 may be a survival issue requires not only a visible commitment from top management for its successful resolution as a strategic priority but also an awareness of its importance by staff at all levels. Line management needs to understand the issue and its implications and accept ownership of the issue. Responsibilities should be clearly assigned. This phase have four objectives: creating visibility; ensuring commitment; identifying resources; and specifying specific strategic objectives at a business line level.

14. Organisations should also be past this phase in their Year 2000 project.

(c) Assessing actions and developing detailed plans

15. This phase moves the project from concept to concrete actions. Detailed inventories of what must be done are developed, covering centralised and decentralised hardware, software, and networks as well as equipment with embedded computer chips and logic. The inventories should include all aspects of business line activities whether internal to the bank or external to it. Risks should be quantified and priorities set based on these risks. 16. While target dates for finishing this phase may vary from one country to another, organisations are expected to have completed this phase or be very close to completing it by September 1997 in many countries.

(d) Renovating systems, applications and equipment

17. This is the only phase of the process that is primarily technical. During this phase, the necessary fixing of operating systems, applications, hardware and equipment takes place. The development of contingency plans that identify alternative approaches if renovations lag or fail is an important part of this phase.

18. Organisations should be well into this phase at this time. Renovation work for significant applications that need to be tested with third parties must be completed with enough time to allow for thorough testing. In countries where Year 2000 preparations are well in hand, completion of this high priority work is being targeted for mid-1998. These countries also typically target that all renovation work be completed no later than the end of 1998.

(e) Validating the renovation through testing

19. Testing represents the largest single task in the Year 2000 project. Detailed test schedules must be developed and coordinated with correspondents and customers. Data flows, internally and with third parties must be thoroughly tested while both the sender and receiver simulate Year 2000 conditions.

20. In countries where Year 2000 preparations are well in hand, for at least larger institutions and all significant applications, the validation phase is being targeted for completion by the end of 1998. All validation work should be completed by mid-1999. Only with this schedule will there be sufficient time for industry and business wide testing with all correspondents and customers during 1999.

(f) Implementing tested, compliant systems

21. Implementation requires careful planning to make sure that interrelated applications are coordinated as to when they go into production. The implementation phase also requires monitoring of progress by service providers and vendors.