2 See, for example, the concepts of Safety I and Safety II in Eric Hollnagel, Jorg Leonhard, Tony Licu, and Steven Shorrock, 2015, "From Safety I to Safety II: A Whitepaper,"  Eurocontrol. 3 Scott D. Sagan, The Limits of Safety: Organizations, Accidents, and Nuclear Weapons, 1993, Princeton University Press. 4 Basel Committee on Banking Supervision, "Principles for Operational Resilience,” March 2021. Joshua Rosenberg, "Thrive in any Environment: Strengthening Resilience  through Risk Management," November 2019. 5 Quote Investigator, “Culture Eats Strategy for Breakfast,” May 2017. 6 Financial Stability Board, “Guidance on Supervisory Interaction with Financial Institutions on Risk Culture: A Framework for Assessing Risk Culture,” 2014. The Institute of  Risk Management, “Risk Culture Resources for Practitioners,” 2012. 7 These are adapted from safety culture concepts in, 1997, Ashgate Publishing. See also, GAIN Working Group E, "A Roadmap to a Just Culture: Enhancing the Safety  Environment," September 2004. 8 Risks highlighted include information and cyber security risks, physical and psychological health risks, technology risks and dependencies. See, Consultative Group on Risk  Management, Bank for International Settlements Representative Office of the Americas, “Business Continuity Planning at Central Banks During and After the Pandemic,” April 2022. 9 Chair Jerome H. Powell, “Coronavirus and CARES Act,” Federal Reserve Board of Governors, June 2020. 10 Federal Reserve Bank of New York Economic Policy Review, Special Issue: Policy Actions in Response to the COVID-19 Pandemic, June 2022. 11 Daleep Singh, “The Fed’s Emergency Facilities: Usage, Impact, and Early Lessons,” July 2020.
Without going into detail, we've mitigated this risk, and successfully worked remotely through subsequent severe weather events. Our business continuity planning and testing helped us navigate the early days of the pandemic, but this event was far more extreme than anything we had practiced, and we learned many lessons. I highly recommend a recent paper by the Consultative Group on Risk Management that brings together insights from central bank experiences managing business continuity risks during the pandemic.8 At the New York Fed, as we were changing where and how we worked, the pandemic's impacts spread to the economy and financial markets. From March to May 2020, gross domestic product in the United States fell by nearly one third (on an annualized basis) and employment dropped by 22 million. Equity markets sold off, and credit spreads surged to levels not seen since the 2008 Global Financial Crisis. Financial market functioning deteriorated with significant declines in liquidity; and, in the municipal bond market, underwriters cancelled new deals and municipal borrowing stopped.