Angola Banking Sector: OverviewChallenges & Opportunities

Basic information about the country

Angola, officially the Republic of Angola , is a country in southern Africa bordered by Namibia on the south, the Democratic Republic of the Congo on the north, and Zambia on the east; its west coast is on the Atlantic Ocean with Luanda as its capital city. The exclave province of Cabindahas borders with the Republic of the Congo and the Democratic Republic of the Congo.

The Economy of Angola is one of the fastest-growing economies in the world, with the Economist asserting that for 2001 to 2010, Angolas' Annual average GDP growth was 11.1 percent. It is still recovering from the Angolan Civil War that plagued Angola fromindependence in 1975 until 2002. Despite extensive oil and gas resources, diamonds, hydroelectric potential, and rich agricultural land, Angola remains poor, and a third of the population relies on subsistence agriculture. Since 2002, when the 27-year civil war ended, the country has worked to repair and improve ravaged infrastructure and weakened political and social institutions. High international oil prices and rising oil production have led to a very strong economic growth in recent years, but corruption and public-sector mismanagement remain, particularly in the oil sector, which accounts for over 50 percent of GDP, over 90 percent of export revenue,

and over 80 percent of government revenue.

Angola: Banking Overview

The Angolan market comprises a total of 23 Banks, according to the listing of Banking Institutions authorized to operate in Angola, published on the BNA site on 7 July 2011.

Name of Bank YearBANCO DE POUPANÇA E CRÉDITO, S.A.R.L. 1976BANCO DE COMÉRCIO E INDÚSTRIA, S.A.R.L. 1991BANCO CAIXA GERAL TOTTA DE ANGOLA, S.A. 1993BANCO DE FOMENTO, S.A. 1993BANCO AFRICANO DE INVESTIMENTOS, S.A. 1997BANCO COMERCIAL ANGOLANO, S.A. 1999BANCO SOL S.A. 2001BANCO ESPÍRITO SANTO ANGOLA, S.A. 2002BANCO REGIONAL DO KEVE, S.A. 2003BANCO BAI MICRO-FINANÇAS, S.A. (1) 2004BANCO BIC, S.A. 2005BANCO PRIVADO ATLÂNTICO, S.A. 2006BANCO MILLENNIUM ANGOLA, S.A. 2006BANCO DE NEGÓCIOS INTERNACIONAL, S.A. 2006BANCO DE DESENVOLVIMENTO DE ANGOLA 2007BANCO VTB-ÁFRICA, S.A. 2007BANCO ANGOLANO DE NEGÓCIOS E COMÉRCIO, S.A. 2007FINIBANCO ANGOLA, S.A. 2008BANCO KWANZA DE INVESTIMENTO, S.A. (2) 2008STANDARD BANK 2009BANCO COMERCIAL DO HUAMBO – BCH 2010

BANCO PARA PROMOÇÃO E DESENVOLVIMENTO, S.A. – BPD

2010

BANCO VALOR, S.A. – BVB 2010

During 2010, the Banking Sector in Angola, naturally influenced by the dynamics of the macroeconomic aggregates, continued to present an accentuated growth of its activity, inclusive over that of the economy. Considering the Financial Institutions under analysis, the Sector grew both in size(increase of some 21% in assets, 22.1% in number of branches and 18.2% in number of employees), as well as in profitability (increase of 24.2% in Banking Income and of 24.3% in Net Income).With the sustainable growth of both the GDP and the Banking Sector, in size and profitability,its is of relevance to conclude that the Sector is still gaining maturity and, therefore, has scope for the Financial Institutions to grow organically. The emergence of the Angolan economy, as one of the main powers in the sub-Saharan region, also permits the internationalization of its’ operations, not solely to countries with cultural affinities, but also to neighboring countries with which it maintains significant commercial relations.

Evolution of the Sector:

In 2010, three new Financial Institutions with distinctive characteristics entered the Angolan Banking System, raising the number of Banks authorized by the BNA to operate in the Angolan market to 23.

Bank usage:

During 2010, the Financial Institutions continued to invest in the expansion of their activity, opening more and more branches and focusing on expanding the coverage throughout the 18 provinces comprising the Angolan territory.

For the ten Banks that reported the number of branches in 2010, it was observed an average of 12.5 branches opened per month (with a total of 150 new branches opened during the year), reflecting an increase of 22.1% in the number of branches in 2010, when compared to 2009.

A reflection of the growing penetration of Banking services and of the transactional component in the Angolan market, is the strong expansion of the Multicaixa Network(Multicaixa (MCX) is the one and only brand name for debit cards issued in Angola, and also the brand name for the one and only interbank network of Automated teller machines and point of sales terminals for electronic payments), providing a significant contribution to the ‘bank usage’ status of the population. In this manner, the continued growth tendency in the average monthly transaction volume, using the Multicaixa Network, was maintained, increasing from 3.6 million, in 2009, to 5.5 million transactions (monthly average) during 2010.This transaction growth was boosted by the strong investment in the Automatic Teller Machine (ATM) and the Point Of Sale (POS) equipment base,which grew 26% and 60%, respectively, implying a monthly implementation average of 21 ATM/month and 379 POS/month.

Banking Income

The evolution of the Banking Income recorded a growth of 24.2% during the period under analysis.The Financial Margin grew by 53.2%, whilst the Complementary Margin decreased by 13.5%. In 2010, the weight of the Financial Margin to Banking Income reached 69.7%, recording an increase vis-à-vis 2009 (56.5%). On the other hand, the weight of the Complementary Margin recorded a decrease in its importance to Banking Income from 43.5% in 2009 to 30.3% in 2010. In so far as the Financial Margin is concerned, the positive behaviour of this caption derives, essentially, from the evolution of the principal Revenue captions which recorded a strong increase:

• Revenue earned on Active Credit Operations (growth of 71.9%); • Securities (growth of 25.6%);• Short-term Interbank Investments (growth of 16.4%)

Quality of the Services

The BNA, conscious of the importance the quality of the services and client attending, rendered by the Financial Institutions, represents to the development and maturity of the Sector, aims to introduce, as from 2011, additional regulatory measures, in order to guarantee the rights and obligations of the consumers of the financial services and products.The BNA aims, in this manner, to be more dynamic and present, and thus also plans to create a portal service for complaint lodging and for the provision of information to the consumers of financial products and services, with the intention not only of clarifying customer issues but also of ensuring a higher quality of the services rendered.

A consequence of this growing concern is that the Instituto Nacional de Defesa do Consumidor de Angola (INADEC), supported by Law no. 15/03, of the 22nd of July of 2003, the so-called Lei de Defesa do Consumidor (Law of Consumer Protection), has also taken on an equally vigilant stance in this area. With respect to the Banking Sector, complaints have increased over the last few months, and are related, essentially, to:

Client attending services

• – Inappropriate attending and the rendering of • inaccurate information to clients;• – Long queues due to the lack of • competences of employees;• – Discrimination; and• – Abuse of trust.

Bank Transfers; IT system failures.

Thus, there is a growing concern regarding the quality of the service rendered, considered a fundamental tool in achieving the ‘bank usage’ and customer loyalty objectives, and the need to create a Banking Client Ombudsman, allied with the awaited regulations on Behavioural Supervision, from the BNA, will provide the necessary bases from which to address this concern.

Challenges:

The continued development of the Banking Sector in Angola, translated into the appearance of new Financial Institutions (both National and Foreign) operating in the market, the continued increase in the ‘bank usage’ population, as well as the diversification and enlargement of the offer of Banking products and services, has resulted in new and growing challenges for the Sector. The existence of a concerted and adequate strategy that permits addressing and providing a response to the challenges that will be posed, both from a business strategy perspective, creating value by taking advantage of the opportunities, but also from a regulatory and an introduction of international good practice perspective, which imply increased challenges from the Institutions’ organizational point of view, is considered fundamental.

The need for an adequate internal governance reflexion, addressing these challenges in an assertive manner:

• Capturing Market Potential and Growth;• New Distribution Channels and Financial Innovation;• Credit Risk Management• Emergence of Investment Banking and the Capital Markets• Training and Retention of Human Resources;• Information Security• Business Continuity Management

1. Capturing Market Potential and Growth

The prospects of economic and social development in Angola constitute a set of business opportunities for the Banking Sector. Despite the evolution recently observed, the degree of ‘bank usage’ reveals room for improvement, particularly when compared to the average observed in the remaining sub-Saharan economies.

The achievement of higher ‘bank usage’ levels will hinge on the per capita income increase, on the sophistication of the behaviour evidenced by the clients and on the contribution of the rural areas to the Sector’s diversification process and to the economic growth in Angola.

2. New Distribution Channels and Financial Innovation

The progress of the Angolan Financial System is, in a way, conditioned by the capacity of the Financial Institutions to increase the levels of the ‘bank usage’ population (in particular through the financial inclusion of the rural population) and through the adoption of service models oriented to the new needs, preferences and behaviours of the current ‘bank usage’ population (predominantly urban).

.The need to reach a materially relevant ‘non-bank usage’ population universe, located in areas with strong limitations in support infrastructure, will motivate the appearance of innovative business models (examples in sub-Saharan Africa are Equity Bank and Capitec), which will require the incumbent Financial Institutions to adapt their business models in order to defend their positioning and guarantee the levels of profitability achieved in the past. On the other hand, the incumbent Financial Institutions, established in the urban areas, where the levels of competition are increasingly higher, are faced with a growing concern regarding the need to retain and manage the effective profitability of their clients.

Considering these challenges, the Financial Institutions should concentrate their efforts on transforming their business and operating models to cater for the current market challenges, taking action in four mainareas:

i) client experience;ii) financial innovation;iii) distribution model; and

iv) technological infrastructure

Client Experience

The increase in the client base and the growing heterogeneity of client preferences, behaviour and needs, will pose growing concerns in terms of obtaining an effective knowledge of the said clients, so as to provide service models adequate to their demands and that guarantee the correct balance between profitability and efficiency.

Hence, the Financial Institutions should continue to invest in the quality of their client databases, so as to adjust their value proposals to the different segments.

This concern will be felt, fundamentally, in the commercial and marketing areas, and expressed through their endeavour to obtain technological (customer relationship management platforms) and human (commercial competencies) means, to assure the collection of information throughout the cycle of interaction with the client, for the treatment, analysis and knowledge production on clients (e.g.: segmentation capacities, campaign management, etc.).

Financial Innovation

The strong dynamics of the Angolan economy promotes both innovation and the adoption of new practices to cater for a Financial ecosystem in which more and more non-financial entities operate (telecommunications operators, retailers, payment processors, etc.).

Notwithstanding, the prospects are for the Financial System to continue to carry out a function of extreme relevance for the growth of the country, with prospects for innovation in the range of the financial services offering, in response to the growing demands of private and corporate clients, in various areas of the Banking business, such as:

Credit – strategic element in supporting companies’ investments (given the ongoing investment in the reconstruction of infrastructure and in the development of businesses) and families’ consumption (given an economy with a growing offer of goods and services);

Savings – financial inclusion of the ‘non-bank usage’ population and the growing savings needs of the ‘bank usage’ population will require an adaptation of the offer and the service models;

Payments – strong improvement in the telecommunications infrastructure allied to the need for flexible payment terms to cater for the consumption growth, will require both ease and diversification of the payment means;

Inclusion services for the ‘non-bank usage’ population – provision of ‘low cost’ financial services (credit and savings products) for ‘low income’ clients;

Brokerage services – the expected launch of the Angolan Stock Exchange will promote a group of specialized related services;Angola Banking Survey

Services for small and medium enterprises (SME) and specific Sectors (e.g.: Agriculture) – the emergence of certain segments and specific needs (e.g.: treasury, exports, etc.) will create specialization in the bundling of Products and Services by segment;

Mobile banking services – the surge of Mobile Banking will foment the appearance of a diversity of services: remote cheque deposit, P2P payments, mobile money (e.g.: MTN), mobile virtual Banking (e.g.: Wizzit);

Expansion of the value chain – the surge of specific financial needs will lead to the development of growth movements within the chain of value (e.g.: appearance of the corporate and investment banking areas).

Distribution Model

The present economic context will require of the Financial Institutions, the reinforcement of the monitoring of the distribution network performance, to guarantee the correct balance between profitability,

quality and risk. Additionally, the strategic purpose to explore the ‘non-bank usage’ and ‘low income’ segments will reinforce this concern, considering that this strategy poses a set of challenges, namely the Banks’ capacity to adapt both their distribution networks to a new market reality and their respective supporting infrastructures.

The expansion of the traditional branch network to this new market represents a high investment, considering the limited existing infrastructures. Hence, Financial Institutions will seek to develop innovative and efficient means to ‘reach’ this target public through innovative and ‘low cost’ distribution models, examples being:

Mobile Branches –

vehicles duly equipped to cater for specific front-office operations, and which will take the banks to the target population, operating on a set of pre-defined routes;

Container Branches –

semi-fixed branches, that will be parked in a specific city or location for a determined period of time, but which can be easily relocated in function of the demand observed;

Commercial Promoters –

informal network of business promoters (e.g.: Barclays Bank – Susu) earning a commission percentage on the business raised;

Mobile Banking –

the rapid penetration of cellular phones allied with the operational efficiency potential that this channel permits, will convert it into an efficient means to reach the population in areas where infrastructures are limited. Consequently, Financial Institutions are gradually pairing with telecommunications operators to provide financial services (e.g.: payments, withdrawals and transfers by SMS). In some cases, services may

even be provided to persons not holding a bank account (e.g.: M-PESA - Joint venture between Citibank and Safaricom and Vodafone).

3.Credit Risk Management

The growing increase in credit concession in the Angolan market, has been followed with a growing concern over the quality and monitoring of the credit portfolio, as well as of the correct appraisal of the risk associated with the operations contracted. In this matter, the Financial Institutions, together with BNA, have been developing and adopting risk management methodologies, in respect of the concession, monitoring and recovery of credit.

4.Emergence of Investment Banking and the Capital Markets

The development of the Banking System over the last few years in Angola has been noteworthy. With the growth foreseen for the short/medium-term for this Sector, which will not only follow the economic growth expected, but will of itself be structural to this growth, the development of various segments will emerge in the Sector to meet the growing demands of the companies and economic agents in Angola, be they Angolan or Foreign Investors with a growing presence in our market.

Investment Banks

The Investment Bank segment will become one of the lead players as a result of a number of factors, such as:

i. The need to find alternative funding sources to the traditional Corporate Banks, given the growing dimension and complexity of the investments to be carried out by the different Angolan economic groups; ii. The need to raise funds for much longer periods and with reimbursement plans indexed to the cash flows of the projects themselves, which will lead to the development of Project Finance/Leverage Finance, traditionally areas covered by Investment Banks and specialized consultants;

iii. The development of Public Private Partnerships (PPP)

iv. The launch of the Capital Market in Angola, in which the Investment Banks have a fundamental role, both in terms of intermediation and assistance to the issuers, as well as in the assistance with the placement of the different securities being issued;

v. The need to design and assemble Debt and/or Equity instruments that permit attracting Foreign Investment, fundamental to the financing of countless projects, infrastructure and Angolan companies, that due to the amount of funds required, which cannot be satisfied solely by the Angolan Banks, need access to international markets to assure such additional funding;

vi. The growth of the market for Mergers and Acquisitions in Angola. Capital Market

With the constitution of the Commission for the Restructuring and Management of the Capital Market Commission, in January 2011, an important sign was given that the creation of the Capital Market in Angola has once again become a priority for the Government. It is also the recognition that a number of important stages need to be developed to guarantee the attractiveness and sustainability of the Angolan Capital Market. The success of the launch of the Capital Market in Angola will depend on the effective conjugation of the following factors:

i. The existence of an adequate Legal Framework, both at the legislative and regulatory level;

ii. The role of the Regulator whilst promoter and supervisor of the transparency and credibility of

the Capital Market;iii. The capacity to attract not only national but primarily international Investors;

iv. The responsibility attributed to Financial Intermediaries in carrying out the functions of operation formalization, custody of the securities and ensuring compliance with the accessory obligations associated with the transactions;

v. The preparation of the Issuing entities (i.e. IPO operations) for a demanding process at the juridical/regulatory, accounting and financial, organizational/process and, no less important, transparency and adequate corporate governance policies, levels.

5. Training and Retention of Human Resources

The Angolan economy has been delivering one of the highest global growth rates and this represents an enormous potential for development, for which the Financial Institutions must be prepared. The development prospects of the Angolan market have translated into an increase in the effective number of employees and in the growing need for the qualification and development of the employees, and it is imperative that the companies’ strategy is attractive and enables the retention of the best people.

Human resources are one of the pillars for the success of the roll-out of the organizations’ strategy, and it is necessary to adapt them to the current change in paradigm at management level (people management versus management with people). Consequently, Human Resource Management should be articulated with the strategy and objectives of the Institution, namely in terms of the capacity to develop teams in the critical Competencies. In this context, it is necessary to adopt Competency Management, which will permit the integrated development at the Training, Recruitment and Selection and Career Management levels, whilst also guaranteeing the articulation with the Remuneration and Benefits Policy, the Performance Evaluation and Mobility Management. For this purpose, the phased structuring and development of this strategy should be built around two perspectives:

i) Model of Functional Development andii) Model of Personal Development.

Models of Functional Development

These embrace the areas that aim to optimize human resources and the integration of the functional and organizational needs resulting from the evolution and the strategic objectives:

Recruitment Model; Performance Evaluation System; Training and Development Programmes; and Talent Mobility and Management.

The success of this model depends, to a large extent, on the capacity to introduce a Performance Evaluation System that guarantees the alignment with the objectives of the Institution, based, to the extent possible, on quantitative performance indicators. This requires, a priori, the definition/evaluation of the competencies’ profiles (Universal, Nuclear and Specific) in accordance with critical functions, which will constitute the basis for identifying the responsibilities, the competencies’ profiles and the training, experience and other requirements.

Models of Personal Development

These covers some of the pillars that support the retention of human resources, both quantitative (e.g. Remuneration and Incentive models) and qualitative (Career, Promotion, Training Models and Succession Plans). From a quantitative perspective the definition of an equitable, competitive and motivating Remuneration Policy, in its fixed, variable and benefits components, is decisive. On the other hand, the qualitative perspective guarantees the acquisition of the Competencies required through the necessary individual development and will reduce the dependence on expatriate employees and, consequently, the associated costs.

6.Information Security

Information and Communication Technologies (ICT) are differentiation, competitive and efficiency vectors in any business. This is no different in the Financial Sector: initially, in the hosting of the critical

business processes; more recently, in the creation of alternative channels of contact between the Bank and its clients, for example, through Home Banking (the Bank ‘in’ the clients’ computer) or Mobile Banking (the Bank ‘in’ the clients’ cellular phone or tablet).

However, the ICTs are also an important risk factor that needs to be monitored and controlled. Particularly in the Financial Sector, as the examples that follow illustrate. One of the largest British Banks was fined one million Pounds when a portable PC that contained the data of 11 million clients was stolen from the home of an employee. The portable PC’s disk and the file with client data was not protected with encryption mechanisms. The British Financial Sector Regulator considered that the Bank had failed in its duty to protect its clients’ information. A well know American Bank lost an unencrypted backup tape with the data of millions of clients. The Bank was fined and is obliged to monitor and compensate clients that suffer any related losses during 36 months. Between January and July 2011, the Portuguese Judicial Police detected 40 fraudulent schemes aimed at clients of the various Financial Institutions present in Portugal, which, according to the local press, resulted in the misappropriation of 7.5 million Euros and affected 20 thousand clients. These schemes configured the economic crime known as phishing (obtaining personal sensitive information, i.e. passwords, credit card numbers and banking information, through fraudulent emails sent to the users). This problem is recurrent at international level.

In the new information society, the Angolan Financial Institutions are also exposed to a set of ICT associated risks, that may affect their clients and have a huge financial and reputational cost, such as:

Internal or external fraud; Cyberspace attack (e.g.: virus, hacking); Theft (e.g.: portable PC theft) or misuse (e.g.: use

of unauthorized software); Malfunction (e.g.: software errors); and Service interruptions (e.g.: energy and communication failures or terrorism).

In this matter, the Angolan Financial Institutions should remain attentive to the legislative reform in the ICT Sector that promulgated, in 2011, the new Framework-Law for Electronic Communications and Information Society Services and the new Law for Personal Data Protection.

Information Security’s objective is to guarantee the confidentiality, integrity and availability of the information assets, i.e. all the information that has value for an organization, and the systems and equipment that hold and process this information. In the Financial Sector, this may mean:

Protect the information assets against unauthorized disclosure, alteration or destruction, in a manner consistent with its importance and sensitivity.

Guarantee an effective response capacity to potential information security incidents, minimizing the respective financial, reputational and operational impacts.

Respect the legal and regulatory obligations

relating to the protection of information assets.

Maintain client, employee, shareholder, business partner and regulatory entity confidence.

Angolan Financial Institutions may address Information Security through various initiatives, depending on their maturity:

Define a strategic information security plan, taking into consideration international good practice, business, legal and regulatory requirements, and the tendencies in the Angolan Financial Sector;

Define the various data security management processes (e.g.: identity and access management, information systems data alteration management);

Evaluate the level of security of the various technological components, conducting a structured set of security tests, internally and externally;

Define a security awareness programme for employees, clients and business partners.

7.Business Continuity Management

The prolonged unavailability of critical services and operations for a Financial Institution, of which are examples, inability to proceed transactions in the trading room, the use of home banking and the use or processing of bank transfers, may place at risk not only the reputation of the Institution itself but also have a significant impact on the Angolan Financial Sector.

Additionally, the Institutions are exposed to global threats related with technological advancement, climate change or political ideologies, which can translate, more frequently, into pandemics, terrorism, cyberspace attacks and natural catastrophes. To these can be added unexpected local events such as fires, technological failures and serious energy or communications failures. Angola, naturally, is also subject to some of these events.

Business Continuity Management is a management process that analyzes the threats, the risks and the impact of the unavailability of the business process in an organization, defines actions to reduce the vulnerabilities and establishes the necessary plans to recover normal functioning, in the event of an occurrence that affects the activity by making criticalresources unavailable (i.e. information systems, premises, employees and suppliers).

The objective of Business Continuity Management is to turn organizations resilient, with the capacity to absorb or recover from adversities.

Aware of this reality, the financial authorities have been issuing recommendations on this matter. The Basel Committee, the International Organization of Securities Commissions and the International Association of Insurance Supervisors issued, in 2006, the High-level principles for business continuity.

Over the last few years, Business Continuity Management has been seen as falling within the mitigation of operational risk, in the context of capital risk management (Basel) and the Internal Control Systems. In addition to the expected pro-activity of some \Angolan banks in this area, one expects the BNA itself, similar to what has occurred with other Central Banks, to issue regulations on this subject.

The Business Continuity Management System should be designed in the form of a process, identifying:

The impact of the unavailability of the principal activities and critical processes; Threats, risks and vulnerabilities; Recovery requirements; Recovery solutions (IS, job, employee and supplier redundancies);

Business Continuity Plans.In an effort to guarantee the effectiveness of the Business Continuity Management System, the Institution should:

Perform periodic updates of the solutions and plans; Conduct periodic recovery and crisis management Exercises; Conduct periodic internal audits in respect of its effectiveness and efficiency.

Opportunities within Challenges:

The point opportunities within challenges refers to what Nihilent can provide to Angola Banking Industry by studying and analyzing Angola Banking Industry, trends, growth, opportunities and challenges. Based upon the Angola Banking Industry's present scenario, the following can opportunities for Nihilent:

1.Enhancing the level of competence & reducing the cost to serve the market.

2.Risk Analysis while entering to newer markets within Angola itself.

3.Expanding the financial literacy of the market.

4.Designing offerings and distribution strategy which is adequate for the needs of the low income segment.

5.Improving all the operational capacities like processes, people, organizational governance, IT etc.

6.Designing operating model that guarantees the correct balance between profitability, cost & risk.

7.Studying current processes in relation to Credit Risk Management & suggesting changes that are required to monitor credit portfolio.

8.Providing support for Mergers & acquisitions & company restructuring.

9.Analyzing and providing the set of competencies need to be possessed by employees to carry out the function.10.Ensuring the optimum recruitment process is in place.

11.Designing model that allows attraction, development and retention of talent.

12.Designing remuneration model that is attractive and fair.

13.Reducing subjectivity in the performance evaluation model.

14.Defining a strategic information security plan, taking into consideration international good practice, business, legal and regulatory requirements, and the tendencies in the Angolan Financial Sector.

15.Defining the various data security management processes (e.g.: identity and access management, information systems data alteration management).

16.Evaluation of the level of security of the various technological components, conducting a structured set of security tests, internally and externally.

17.Defining a security awareness programme for employees, clients and business partners.

18.identifying the impact of the unavailability of the principal activities and critical processes; Threats, risks and vulnerabilities;Recovery requirements;Recovery solutions (IS, job, employee and supplier redundancies);Business Continuity Plans.

19.Conducting periodic recovery and crisis management Exercises.