Preparing for Future Crises in Germany

Germany has been working over the past three years on a project known as BASIC, which aims to strengthen the resilience of the cash supply infrastructure in the event of an emergency or crisis, with part of the project focused on developing a security framework to secure the work processes of cash providers. The Bundesbank recently held a conference to give a summary of the programme and key recommendations.

BASIC involved four partners – the Brandenburg Institute for Society and Security, the Bundesvereinigung Deutscher Geld (German Federal Association of Services for Cash and Valuables), Cash Logistics Security and the Center for Applied Research on Supply Chain Services at the Fraunhofer Institute for Integrated Circuits IIS. The Bundesbank, European Security Transport Association, German Retail Federation and the Federal Office for Civil Protection and Disaster Assistance are associate partners.

It has been funded as part of the ‘Civil Security - Socio-Economic and Socio-Cultural Infrastructures’ by the Federal Ministry of Education and Research (BMBF), which is part of the government’s ‘Research for Civil Security’ programme.

Setting the terms

The definition of crisis and emergency was broadly set, ranging from small to large scale, with a wide range of causes. The project started by looking at pre-existing emergency plans of the cash cycle stakeholders to validate these plans with regard to successful conditions and need for action. This was used to establish a uniform framework to allow all to optimise and dovetail their plans.

The research focused on service providers for cash and valuables, since they are key players in the cash cycle with interfaces to all other players. The idea was to support key stakeholders to react to security scenarios with their corresponding consequences, and to further develop their existing plans for emergency and crisis.

During the project, the researchers used three scenarios for their findings:

• Power failure

• Failure of IT and communication system

• Staff shortages.

In addition to their own analyses, researchers carried out surveys and interviews with cash and security service providers (national and European), credit institutions and retail representatives.

The research found gaps in potential service provision because the last few decades have been very peaceful for Germany, as result of which no-one had paid much attention to crisis resilience. But that has changed thanks to COVID, the war in Ukraine and recent natural disasters.

The federal system (central government, federal state government, each municipality, each county) is also seen as a weakness, as there are too many different decision makers. The research group also found out that, although each stakeholder has its own emergency plan, these have not been communicated with others.

Key recommendations

The recommendations from the research groups are:

• Responsibility: Clear definition of responsibility and person in charge for including all related tasks.

• Practicability: When creating emergency plans, people who have to implement the measure need to be involved in the creation of those plans.

• Format and accessibility: All emergency plans have to be printed out, to be accessible to the people involved at any time. This applies in particular to the contact details of the service providers for cash handling.

• Storage: The locations where the plans (analogue/digital) are stored must be known to all relevant people and may not be changed without prior agreement or information.

• Clarity: The plans must clearly define when an emergency or crisis occurs and when appropriate measures must be taken.

• Reporting chains: Clear definition of the reporting chains to be followed in the event of an emergency or crisis, as well as the responsibilities for emergency and crisis management (crisis team), including deputy regulations. The respective institution must clearly regulate and communicate these guidelines.

• Training: The people involved must be educated, trained and informed about the contents of the plans.

• Key players: When drawing up the plans at one institution, the other players in the cash cycle must also be taken into account, depending on the extent of the respective mutual cooperation (contact details, alternative procedures).

• Interfaces: The relevant key personnel must be informed about emergency and crisis measures that affect the operation of interfaces to other cash handling companies. The people who are responsible for emergency and crisis management must network and set up communication and cooperation touch points between the stakeholders in order to get a better mutual understanding of the scope and complexity of the respective work processes and what measures can realistically be achieved.

• Exercises: Regular training should be repeated, if possible.

• Crisis communication: Crisis communication to the public or to the other players in the cash cycle must be prepared.

• Adjustments: All incidents must be analysed to see whether adjustments or improvements to the existing plans would be necessary.

• Verification: Use a check list to verify the existing plan from time to time.

Extended recommendations

• There needs to be agreement that cash handling stakeholders are important for the national infrastructure. There needs to be a clear definition of cash handling stakeholders. During COVID, for example, cash handling service providers were not considered as system critical, therefore the children of the staff could not go to kindergarten. As a result children had to stay at home and this caused staff shortages.

• Allow and promote communication between the stakeholders; although the companies are competitors, they should be able to discuss and prepare together without running foul of antitrust regulations.

• There needs to be a common understanding of the definition for crises and emergency.

• Further research is required to understand the consequences of a mid-range or long-term blackout. Currently there is too little data available.

• Maintain the existing cash infrastructure. If this cannot be maintained, then payments will be difficult in case of crises.

• Further research is required about how to communicate with citizens about where to get cash during an emergency.

• To add cash to the government checklist provided to citizens about how to prepare for an emergency.

• Further research required for a cross border supply of cash in case of emergency.

Further development – the CARE project

As part of BASIC, the Bundesbank is laying the foundations for significantly improving the exchange of information and communication in the event of disruptions, emergencies, and crises, including a situational overview of what is happening in the cash cycle.

A project known as CARE (Cash Resilience) has been started to develop an application for emergencies and crises which, in its final version, will contain decision-relevant data of all professional cash handling stakeholders.

General information on the cash infrastructure – including functional status – is made available at a central location. This significantly improves the exchange of information and communication in the event of disruptions, emergencies and crises.

Based on master data on cash withdrawal and disposal points, as well as event reports in the cash cycle, CARE will calculate and provide a situational overview for decision-makers. Interfaces with other important public bodies are also important, for example the Federal Office for Information Security, the Federal Office for Citizen’s Protection and Protection Against Disasters, the police and other public bodies.

To support this, the Fraunhofer Institute has developed a mathematical optimisation algorithm to ensure unrestricted access to cash in the event of a crisis. The BASIC algorithm indicates which of the available ATMs and banks in Germany are the best withdrawal points for cash distribution in the event of a withdrawal of service. The mathematical model created will be used to model people’s cash withdrawal behaviour in the event of a crisis and then to control cash distribution. The algorithm is being tested based on geodata from OpenStreetMap.

When applied within the security framework, the algorithm can be used for operational crisis support (eg. which ATMs should be supplied if only 30% are available) and in crisis preparation (eg. which are the central cash withdrawal points that should be covered by emergency power generators).