Subject

Items to be checked

Explanations

1. Awareness and Involvement by Top Management

(1) Has top management acquired an understanding of the Year 2000 problem and endorsed resolution of this issue as a strategic goal of business survival and not only as a technical issue? Is top management actively involved in developing and implementing a Year 2000 compliance program?

• How is the Year 2000 compliance program reflected in management strategies?

• Have necessary resources for the Year 2000 compliance program been estimated and built into budgets?

• How has clarification been made of the directors and office responsible for managing the Year 2000 compliance program, and what type of organization has been put in place?

• In what form and how frequently are periodic reports made to top management concerning progress in the steps of the Year 2000 compliance program?

(2) Has top management taken steps to create organizational awareness by staff at all levels of the Year 2000 problem and measures to address this issue?

• Who is responsible for and in charge of the Year 2000 compliance program for each business department?

• What steps have been taken to enable all staff to understand the Year 2000 compliance program?

(3) Is top management in close contact with the government and the Bank of Japan concerning the content of the Year 2000 compliance program?

• Does top management understand the Year 2000 compliance programs that are developed by the government, the Bank of Japan and industry associations and does it take that into account in formulating its measures to address this issue?

(1) Have plans to address the Year 2000 problem been developed?

• The BIS paper argues that a specific and detailed Year 2000 compliance program was expected by September 1997. If a program has not been developed as of yet (August 1998) there is a strong possibility that countermeasures will not be implemented in time and that there will be a serious impact on operations.

(2) Has an inventory of systems that may be affected by the Year 2000 problem been developed?

• Does the inventory cover systems which are connected with third parties as well as internal ones?

• Are the systems in local branches and overseas offices included in the inventory?

• Does the inventory cover equipment with embedded microprocessor chips such as vaults and anticrime equipment?

(3) Have explicit target dates been established for each step of the Year 2000 compliance program (including inventory of systems that may be affected, renovation of systems and testing)?

• What are the target dates for achieving each step?
• In particular, do the target dates allow sufficient time for testing?

(4) Is the financial institution taking initiative in contacting external vendors and other service providers concerning the Year 2000 compliance program?

• Has the institution identified and assessed particulars such as the services and equipment to be provided by outside vendors and service providers?

• Have the responsibilities of outside vendors and service providers, and the financial institution, been identified, and has a clear statement been made of their respective responsibilities?

• Is the financial institution aware that the outside vendors and service providers cannot necessarily certify that their products will work properly after the Year 2000?

• What monitoring mechanisms have been put in place to verify whether or not external vendors and service providers are taking appropriate measures to address the issue?

• Has a process been established that allows the financial institution itself to test renovated services and products to the extent possible?

(5) Is the financial institution discussing and addressing with customers and major clients the Year 2000 compliance program?

• How has the financial institution identified customers and major clients that may influence the financial institution in connection with the Year 2000 problem, through what means are they gaining knowledge of the progress by these entities in addressing the issue, and what has been the result?

• What action is being taken based on the results of identifying the extent of measures taken by customers and major clients in addressing the year 2000 problem?

(6) Has the department responsible for managing the Year 2000 compliance program correctly identified and addressed the state of progress in each step in the program?

• In what manner and how frequently does the department responsible for managing the Year 2000 compliance program monitor the state of progress in the work involved?

• In what manner and how frequently does the department responsible for managing the year 2000 compliance program report to the top management?

• In the case that the top management, receiving periodic reports, identifies problems (for example lack of budget allocation, failure in correcting problems or delays in implementation), how does the top management address these concerns or give instructions?

(7) Has the financial institution obtained the necessary budgets, human resources and equipment to implement their Year 2000 compliance programs?

• What are the estimated budgets for implementing the Year 2000 program and testing, and to what extent have these been obtained?

• What is the estimated number of persons constituting the human resources (particularly skilled programmers), both within the financial institution and from outside contractors, that are needed to implement the Year 2000 compliance program and test, and have these resources been obtained?

• How are allowances to be made if additional budget allocations or human resources are necessary during the course of implementing the Year 2000 compliance program?

3. Renovation and Testing of Systems and Other Elements

(1) What is the state of progress in renovation including systems, applications and equipment?

• What are the target dates for completing the renovation of systems, etc.? (The BIS Paper expects that renovation work with high priority to be targeted for completion by mid-1998 and all renovation work to be completed no later than the end of 1998).

• What is the rate of progress for renovation of each system, etc.? If renovation is behind schedule, what are the reasons for the delays?

• Do renovations of computer programs also take into consideration that 2000 is a leap year?

(2) How frequently and in what manner are reports made to top management concerning the state of progress in renovations, etc.?

• Are reports made to management in a timely fashion stating any problems occurring in the course of renovation, and any delays in renovation behind the initial schedule, and are appropriate measures taken?

(3) How are renovated systems, etc., tested within financial institutions and with third parties?

• What is the specific schedule for testing (the BIS Paper expects testing of on-line systems with major clients and all major applications to be completed by the end of 1998, and all that validation work be completed by mid-1999).

• Have directors, customers, and major clients, etc., been informed of the specific testing schedule?

• Is testing including third parties such as customers and major clients?

• What is the scope of the systems and applications, etc., covered by the testing? If some systems are not to be tested, how will their Year 2000 compliance be ensured?

• What specific measures are to be taken if testing results reveal that further corrections are necessary?

4. Development of Contingency Plan

(1) What contingency plan has been developed to deal with problems that may occur in the course of renovation and testing, of systems to address the Year 2000 problem?

• Does the contingency plan also cover problems that may occur in relation to external clients and others?

• Does the contingency plan also cover problems that may occur with local branches and overseas offices?

• Does the contingency plan also cover problems that may occur in relation to social infrastructure, such as electricity, water and telecommunications?

• Have estimates been made of the amount of time the institution can operate under the contingency plan?

(2) What contingency plan has been developed to deal with problems that may occur on or after January 1, 2000?

5. Other

(1) What steps are being taken to address the Year 2000 problem at overseas offices?

• In what form and how frequently are reports made to the head office concerning the state of progress in measures to address the Year 2000 problem at overseas offices?

• Is information reported regularly to the head office concerning Year 2000 compliance procedures at the supervising authority in the relevant jurisdiction, and does the top management understand this information?

• Are reports made to the head office of issues raised and reports requested through inspections by the supervising authority in the relevant jurisdiction? What measures are being taken by the top management of the head office to address these issues and concerns?

(2) Has the state of progress in the Year 2000 compliance program been disclosed to shareholders, customers, and others?

• In what form, how frequently, and what type of information is disclosed?

• In foreign jurisdictions there are cases in which clients will refuse transactions or demand increased commissions for transactions, if full disclosure is not made of the extent of progress in addressing the Year 2000 problem.