Report from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions - EU infrastructures and the year 2000 computer problem - Q1 1999
Date: 1999-11-23
Institutions: European Commission
Subjects: computer system, computer systems, data processing, report, type of business

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 23.11.1999
COM(1999)545 final

REPORT FROM THE COMMISSION
TO THE COUNCIL, THE EUROPEAN PARLIAMENT,
THE ECONOMIC AND SOCIAL COMMITTEE
AND THE COMMITTEE OF THE REGIONS

EU Infrastructures and the Year 2000
Computer Problem

Q1 1999

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Table of Contents

1

2

3

EXECUTIVE SUMMARY ....................................................................... i

INTRODUCTION ................................................................................... 1

ENERGY................................................................................................. 2

3.1 Overview............................................................................................. 2

3.1.1

International Activities in the Energy Sector ......................................... 3

3.2 Electricity............................................................................................ 4

3.3 Natural Gas......................................................................................... 5

3.4 Oil and Coal........................................................................................ 6

4

TRANSPORT .......................................................................................... 6

4.1 Aviation............................................................................................... 7

4.1.1

International Activities in the Aviation Sector ....................................... 7

4.1.2

EU Aviation .......................................................................................... 8

4.2 Maritime Transport............................................................................ 9

4.2.1

International Activities in the Maritime Sector ...................................... 9

4.2.2

EU Maritime Transport ....................................................................... 10

4.3 Rail Transport .................................................................................. 11

4.3.1

Overview............................................................................................. 11

4.3.2

EU Rail Transport ............................................................................... 11

4.4 Road Transport ................................................................................ 12

5

TELECOMMUNICATIONS................................................................. 12

5.1 Overview........................................................................................... 12

5.2 International Activities in the Telecommunication Sector ................ 13

5.3 EU Telecommunications ................................................................... 14

6

NUCLEAR SAFETY............................................................................. 14

6.1 Overview........................................................................................... 14

6.2 International Activities on Nuclear Safety........................................ 15

6.3 EU Nuclear Safety ............................................................................ 15

6.4 Nuclear Safety in Central and East European Countries (CEEC) and
New Independent States (NIS).................................................................. 16

7

FINANCE ............................................................................................. 17

7.1 Overview........................................................................................... 17

7.2 International Activities in the Financial Sector................................. 18

7.3 EU Finance........................................................................................ 19

8 WATER ................................................................................................. 20

9

INTERNAL COMMISSION ACTIVITIES........................................... 21

10 CONCLUSIONS ................................................................................... 22

11 ANNEX ................................................................................................. 24

1 EXECUTIVE SUMMARY

Understanding of the nature of the Year 2000 computing (Y2K) problem has
continually evolved during the past few years. It is not simply an IT system
problem, nor primarily a management problem, nor even a general business
problem, it concerns interdependencies. These interdependencies exist at many
levels, the most fundamental of which are those basic infrastructures which
provide the essential services upon which all depend.

Organisations completing their Y2K adaptation and testing activities are shifting
their efforts to contingency planning. Their scope of interest thus becomes much
wider than their own internal environment, and they must assess the effect of
external factors. Inevitably, concerns arise regarding the preparedness of the
suppliers of essential services, in particular, areas such as energy, transport,
telecommunications, finance, and water.

The information which is presented in this report is intended to provide a broad
overview of the Y2K-related activities and issues in each of these sectors from
an EU perspective, and is aimed at national authorities, Industry in general,
infrastructure operators, and the public. A comprehensive list of websites with
additional information is annexed. The relevant administrations, regulatory and
supervisory authorities in the Member States, as well as European and
international associations, all contributed to the report.

Although the situation naturally varies between sectors and in different countries,
a number of important trends are now emerging across all sectors, and
throughout the EU as a whole. Positive developments are:
• Regulatory and supervisory authorities are increasingly involved in

monitoring and auditing vital infrastructure sectors.

• Co-ordination efforts are being carried out by sectoral, national, and

international associations.

• Bilateral, multilateral, end-to-end, and national testing is occurring.
•

Information campaigns are being planned or ongoing to maintain public
confidence.

• Greater information on progress, results, risks, and contingency plans is

available.

• Forerunners are helping those who are still lagging behind.

Nevertheless, every sector consistently reported that smaller organisations
continue to lag significantly behind large companies in addressing the
millennium problem, and all organisations retain a strong dependency upon
their IT system suppliers to provide an accurate disclosure of the compliance
of their products and to deliver timely compliant upgrades.

Companies and organisations throughout the EU are vigorously tackling the Y2K
problem and are now starting to demonstrate their success in doing so. The
overall assessment
significant disruption to EU
infrastructures during the millennium period is limited. Any problems are
likely to be localised and occur in smaller organisations. Since such risks,

the risk of

that

is

i

however minor, still exist, efforts are ongoing in every sector to establish
thorough, comprehensive contingency plans in mitigation.

The format of the report involves a general overview of each sector in the Y2K
context, followed by a summary of the activities undertaken by international
bodies, including specific sectoral Commission activities where relevant, and then
an outline of the current EU situation. A brief synopsis of the Commission
internal situation and the general Y2K-related activities of the Commission is also
provided.

The Commission has, with the close co-operation and support of the Member
States authorities and international organisations, undertaken a significant effort
to prepare quarterly reports on EU progress in tackling the millennium bug.
Various administrative difficulties have delayed publication of this Q1 99 report,
and thus the response of the Commission to the request of the Council and
European Parliament to be kept regularly informed of the Y2K situation in the
EU. However,
the adoption of the Q2 99 report will follow shortly during
November. A Q3 99 report is currently in preparation and will be adopted before
the end of 1999.

Each report is complete in itself, and contains useful background information
which has emerged as the problem evolves. Given the international aspect of the
problem, having this information available in all EU languages is important for
EU business and citizens.

ii

Information was
collected...

...on vital country
infrastructures...

...to provide an
overview of the main
Y2K-related issues and
activities within the EU

2  INTRODUCTION

The information on the Year 2000 computer problem (Y2K) which is presented in
this report has been provided by the relevant administrations, regulatory and
supervisory authorities in the Member States, as well as European and
international associations. Countries which made specific contributions include
Belgium, Denmark, Germany, Greece, Spain, France, Italy, Luxembourg, the
Netherlands, Portugal, Finland, Sweden and the United Kingdom. Both
Switzerland and Norway also reported on their situation. The reporting timeframe
was mid-March 1999.

is to provide a current overview of the Y2K
The intention of this report
preparations of essential infrastructures, in order to assist industry and the public
in gaining a greater understanding of the EU situation. The specific choice of
infrastructures to be reported on was agreed in consultation with Member States.
It is recognised that other domains such as health and food supply chains are also
important, but health is primarily a national concern, and it is not possible to
provide an EU overview of food supply chains.

This report presents the information as provided by Member State authorities and
the other sources cited above. The report is not a comparative assessment of
country preparedness, but rather an analysis of the main issues and the activities
which are being undertaken in vital infrastructure sectors, particularly in an EU
context. The role of the Commission in this domain is to facilitate the exchange of
information and experiences between EU countries and organisations, focusing on
areas in which there are potential cross-border impacts. The individual companies
and Member State authorities concerned must carry out the necessary actions to
ensure that the business continuity of essential services is maintained during the
millennium changeover.

In 1998, the
Commission reported
twice...

Throughout 1998, the Y2K Problem received high level political attention in the
EU. The Communication of the Commission on the subject (COM(98)102),
issued in February 1998, aimed to establish a shared and common understanding
in Member States of the scope, the potential risks associated with the problem,
and the need to take appropriate action.

...on various aspects of
the problem

This action was followed up by a Commission report presented to the Vienna
Council in December 1998 on How the EU is Tackling the Year 2000 Computer
Problem (SEC(98)2100). The purpose of this report was to provide an overview
of Member State preparations and to identify areas where progress might be
insufficient and greater action should be taken. Although substantial progress
took place during 1998, with both the financial and telecommunication sectors
local
demonstrating
administrations, and for the energy and transport sectors. These concerns arose
primarily from the lack of available information in these areas.

concerns were

significant

expressed

activity,

for

In 1999, the level of political attention being given to the issue has further
intensified. The topic continues to appear on the agenda of high level meetings
within the EU,
including the Telecommunications and Energy Councils, and
internationally in fora such as the G8.

1

In 1999, the focus is
shifting to contingency
planning...

...and to external
factors, particularly
essential services

Access to reliable,
comprehensive
information is critical
for all consumers

In the first quarter of this year, as countries and organisations are completing
their adaptation activities, the focus of their efforts is shifting to contingency
planning. Such planning is now taking place at various levels. Individual
organisations are developing plans to ensure the continuity of their own business
operations. Certain sectors are in the process of establishing much more elaborate
sector-wide contingency plans. This is particularly apparent in the energy, water,
aviation, telecommunications, and finance areas. In several countries, government
initiatives are co-ordinating the plans of emergency services at local and national
level.

As organisations and sectors concentrate on contingency planning, their interest
moves from the internal environment to the external environment, and specifically
to the essential services upon which they rely to continue their operations. The
Consumer Committee, an advisory committee to the European Commission,
emphasised, in its opinion adopted the 24 September 1998, the need of consumers
to receive more information on Y2K preparedness. This need is crucial in the
context of services, such as telecommunications, energy supply, and transport,
since consumers are entirely dependent on the capability of providers to address
Y2K-related problems.

The report also provides useful pointers to the enormous wealth of additional
to clear,
information which is available on Internet websites. Access
comprehensive information on potential implications and contingency plans is
essential for consumers, particularly evidence of the ‘Year-2000 compliance’ of
services and products, and reassurances that quality and continuity will be
ensured. This information need could also be addressed through ‘checklists’,
prepared for consumers by providers, which would help them to identify
individual risks and provide instructions on how these risks could be minimised,
as well as giving advice on how the impact could be reduced in case of any
the
disruption. The Internet also provides easy access to information about
numerous technical software solutions which are available to assist organisations
to identify potential problems and facilitate their adaptation efforts.

The format of the report involves a general overview of each sector in the Y2K
context, followed by a summary of the activities undertaken by international
bodies, including specific sectoral Commission activities where relevant, and then
an outline of the current EU situation. A brief synopsis of the Commission
internal situation and the general Y2K-related activities of the Commission is also
provided.
3 ENERGY

The continuity of energy
supplies must be
assured

3.1 Overview
The provision of energy is clearly a vital service for every aspect of an economy
and the welfare of its people. In addition, with the date change in the EU
occurring in the middle of winter, the need and demand for energy will be high,
particularly in the more northern countries. The overall continuity of energy
supplies is essential.

2

Various energy forms
rely on each other, and
on other infrastructures

Rigorous Y2K
programmes in place in
energy firms...

...with comprehensive
contingency planning to
handle residual risks

Commercial
commitments must be
fulfilled...

...and national
authorities closely
involved....

...with relevant industry
associations also
playing a part

This is particularly important for electricity supply, which is not stored and where
supply failure could lead to failures in other areas, including telecommunications
and some transport systems, building equipment such as lifts and control systems,
the vast array of electrical equipment, central heating installations, and lighting.
Interruptions to other energy sources, and in particular to natural gas, for which
customers do not usually have storage mechanisms, would also have serious
effects. The inter-reliance of energy forms is also important. Gas compression for
transport and distribution requires electricity, whilst a growing share of electricity
is now generated by gas in the Community. The integrity of interacting energy
forms is thus essential, as well as the reliability of other infrastructure sectors,
notably telecommunications.

As in all sectors, the primary responsibility for tackling the Y2K problem lies
with the energy supply companies and utilities themselves, excluding the issue of
equipment after the meter. The firms in this sector are carrying out rigorous Y2K
programmes for their energy supply systems, as well as other systems such as
internal telecommunications, control systems, office equipment, security, safety,
and even financial systems, since these could also jeopardise energy supply
continuity. Typically, Y2K programmes of the energy supply industry are subject
to external audits.

Despite their best efforts, a residual risk of failure will inevitably remain, to be
addressed through contingency plans. These may be developed in co-operation
with the authorities and often involve the adaption of existing contingency plans
developed to deal with other possible emergencies. Such plans need to cover all
major possible eventualities, including standby energy supplies for important
customers, measures to deal with the failure of essential inputs or services, such
as input fuels for power stations or communications, and measures to handle the
failure of key equipment items in the supply chains for the different energy forms.

Another characteristic of the energy sector is that it operates on a commercial
basis, with commercial relationships governing the supply of energy to the
consumer, but also for supplies to energy companies, of primary fuels for
example, and for exchanges, notably across borders, between energy companies.
The primary responsibility for ensuring the continuity of supply in these areas
also lies with the operators concerned, who must take all necessary measures to
ensure that their commitments are fulfilled.

Given the vital role of energy supply, it is clear that national authorities must also
become closely involved in Y2K programmes in this sector. Their activities
include ensuring that energy companies are undertaking all necessary actions,
through independent audits and other monitoring; providing a platform or forum
for the co-ordination of activities and the exchange of best practice, which may
occur across sectors; developing sectoral contingency plans; and providing
information to the public on the progress of preparations.

3.1.1

International Activities in the Energy Sector

The relevant industry associations also play an important role in exchanging
information and co-ordination, including at international level, particularly for the
network industries of electricity and gas. The European Commission is playing a
role at
too, providing a forum for Member States to exchange
information and co-ordinate their activities, focusing on areas with significant
cross border effects, such as electricity and gas.

this level

3

Flows of energy
between utilities and
countries must be co-
ordinated...

The industry association UNIPEDE/EURELECTRIC, which facilitates a regular
exchange of information between its European members, has supplemented the
information which has been provided by Member State administrations in this
report. EUROGAS fulfils a similar role in the gas supply sector.

An important issue in this sector is the interchange of electricity between utilities
and countries. These flows may consist of regular trade in a particular direction,
or more fluctuating flows which depend upon short term economic and load
characteristics. These exchanges are co-ordinated within the UCPTE (Union pour
la Coordination des Producteurs et Transporteurs d’Électricité) and the Nordic
System (NORDEL) in the EU. The UCPTE proposed the adoption of a “minimal
load policy” for the changeover period and to increase the generation reserve. In
to contractual
essence, exchanges will be reduced to a minimum, subject
demand.
own
country
obligations, with
Interconnections would remain connected to allow for mutual assistance if
required.

to meet

prepared

each

its

...with mutual
understanding and
agreement on plans for
the changeover period

For all such interlinkages, notably those between critical fuel suppliers and
generators, between electricity utilities, (both horizontal and vertical links), and
between suppliers and very large customers, including auto-producers, it is vital
that there is a mutual understanding and agreement on plans and procedures for
the date change period, including any linkages with non-EU countries.

Most EU electricity
firms plan compliance
well before the end of
1999
To continue to meet
demand....

...extra stocks of fuel,
alternative power
sources and additional
communication
facilities

3.2

Electricity

All countries in the EU have Y2K programmes for the electricity sector, which
have been running for some time, and companies expect most of their systems to
be compliant before the fourth quarter of 1999.

It is a major challenge. The whole electricity supply chain must be assured as far
as possible, from the supply of electricity generation fuels,
through to the
consumer’s meter. Since electricity is not stockable, demand must be met on a
close to instantaneous basis. This requires that adequate generation plant must be
running at the critical time, with instantaneous spare capacity (spinning reserves)
also ready in case of plant failure. Hydro plant and pumped storage plant, which
can operate autonomously and which can also generate power at very short
notice, are also very useful in this respect.

In preparation for a possible disruption to fuel supply, stocks will be increased
where not already sufficient, particularly for coal- and oil-fired generation
(nuclear reactor fuel is only changed periodically). For gas-fired generation, the
role of the gas supplier is crucial, although some power stations are dual or even
triple fired (oil/gas/coal), an important consideration if the continuity of gas
supply is not maintained. Another problem could be the failure of a large
consumer, causing a sudden drop in load, which would require an immediate
reaction by the grid control/dispatching centre. The transmission and distribution
systems must also be assured and be able to cope with potential unpredictable
changes in supply and demand. Adequate communications between all the key
components is also clearly vital, and some companies have installed extra
facilities to manage the grid in case of loss of telecommunication networks.

4

Slight possibility of
small local failures...

...but no major
disruptions expected

Significant difference in
the EU gas sector –
dependency on foreign
suppliers

Extensive co-ordination
efforts are being
made...

...supported by
additional storage and
flexible, diversified
supply, ...

It is recognised that risks of local failures in individual smaller production or
distribution facilities may exist; however, such problems can normally be handled
in such a manner that they are unlikely to cause a major disturbance to the
electricity consumer. The general recommendation of the sector is that “each
electricity consumer should take the measures against electricity cuts that they
would do under normal circumstances.”

Whilst the challenges for this sector are considerable,
the electricity supply
industry has been working very hard to meet them, co-operating with public
authorities and through various international associations, and it is generally felt
that, providing the full range of measures are pursued, there should be no major
failures in supply.

3.3 Natural Gas

Natural gas supply has some similarities with electricity but also significant
differences, making it an important energy form with respect to the Y2K problem.
In terms of similarities, it is characterised by a supply chain structure, with one
connection to each consumer. The most significant difference is the large
dependence on supplies of natural gas from outside the EU. Currently, such
supplies account for just under 40% of total demand in the EU as a whole, with
the bulk provided by Norway, Algeria and the Russian Federation. This
percentage varies considerably by Member State, as does their reliance on the
three particular countries.
In terms of indigenous production of natural gas, the
Netherlands is a very large producer, exporting about 40% of its output to other
EU countries. The UK is also a major EU producer, and is now connected to the
continental grid with a link to Zeebrugge on the Belgian coast.

The relevant firms in EU producing countries have been making very extensive
efforts to assure the continuity of their supplies, as has the gas supply sector as a
whole, which has been working on this problem for a number of years. Co-
ordination with upstream suppliers, between utilities, and with customers is taking
place, though there are difficulties in obtaining information on Y2K compatibility
for supplies originating outside the EU. Moreover, pipelines from two of the
major external suppliers cross non-EU transit countries.

One of the main considerations for the gas sector is thus how to deal with a
In general, to ensure supply security,
possible interruption in external supplies.
the industry has been building up over a long period very substantial gas storage
facilities, flexible supply possibilities with indigenous sources, and greater
interlinking and diversified supplies in the European grid. These measures are
able to deal with interruptions to supplies of many months and longer, and could
easily cope, with suitable preparation, with interruptions created by the Y2K
problem. Nevertheless, the European gas supply industry must continue to co-
operate together, using existing contingency plans and facilities, in order to be
prepared in the event of a major failure in supply due to the Y2K problem.

...and common
agreement and co-
operation

Additionally, many of the other measures mentioned for the electricity sector also
apply, such as the need for a common understanding and agreement on gas
interchanges between utilities, as well as on the intentions of very large
consumers. Equally, other vital services such as telecommunications and
electricity supply must be assured. With all these measures adequately addressed
however, there should be no significant failure in supplies to final consumers.

5

Oil is of less concern in
the EU...

...due to substantial
stocks…

...and diversification of
suppliers and supply
routes

Coal is the energy form
of least concern

3.4 Oil and Coal
Whilst the oil sector is equally important for the economy and welfare of its
citizens as electricity and gas, including a vital role in transport as well as for
heating,
its supply structure and particular characteristics are significantly
different.

Firstly, oil can be readily stored, thus those who are dependent on this fuel for
heating can have stocks in place. Moreover, for the oil supply industry as a
whole, substantial oil stocks should exist, to meet the levels required under EU
legislation for general supply security reasons (90 days consumption required to
be held by the industry or designated agencies for each Member State).

Secondly, the oil supply industry is very diverse, characterised by very large
multinational companies and a multitude of often much smaller independent
operators. The large companies have invested considerable efforts on the Y2K
problem to ensure the continuity of their operations, whilst smaller companies are
typically very quick in meeting any deficiencies in the supply chain which may
arise. Furthermore, this diversity is reflected in the number of supply routes and
main linkages in the supply chain, with oil transported by ship, barge, pipeline,
train and lorry, between diverse and competing crude oil sources, refineries and
distributors.

Nevertheless, the dependence on non-EU oil supplies, at nearly 80%, is high, and
as with natural gas, it is not possible to be certain of the effect of Y2K on external
producer countries. Member States should therefore ensure that contingency plans
are able to deal with any disruption in supplies, and confirm that measures have
been taken for the key installations within their territory, such as import
terminals, production and storage facilities, refineries, and major pipelines.

The coal sector is perhaps the energy form of least general concern with respect to
In part, this is because indigenous production of coal in the
the Y2K problem.
EU has declined considerably, primarily in Germany, the UK and Spain.
It is
clear however that
take measures to prevent
the companies involved must
disruption to their production. Likewise, consumption is rather concentrated, and
is mainly accounted for by power generation, steel and other industry, though
these users too will need to take measures to assure their supplies and to hold an
appropriate level of stocks. In addition, as for the oil sector, Member States will
need to assure themselves that key infrastructures, such as import terminals and
bulk transport, are assured.
4 TRANSPORT

Co-ordination
mechanisms between
different modes of
transport are essential

As in the energy sector, several EU countries, including the Netherlands and the
UK, have established national transport platforms or ministerial bodies to co-
ordinate Y2K activities throughout the sector. Although Y2K problems tend to be
specific to particular modes of transport, a degree of co-ordination is essential in
ensuring the continuity of multimodal transport throughout the EU.

There are common transport issues, for instance the systems responsible for the
opening and closing of bridges, that are of concern to shipping, as well as road
and railroad traffic.

6

4.1 Aviation

Aviation represents a
complex international
supply chain....

The aviation sector represents a complex international supply chain, where
aspects such as flight safety, the carrier supply chain, and the customer supply
chain must all be taken into consideration when addressing the Y2K problem. It is
therefore an area in which co-operation at international level is essential. Various
national and international organisations in the aviation industry are actively
addressing the millennium problem.

...therefore regulators
must work together...

...with international
bodies

ICAO will assess global
airspace safety, ...

...EUROCONTROL is
co-ordinating air traffic
contingency efforts, ...

... IATA is carrying out
site assessments, ...

International Activities in the Aviation Sector

4.1.1
A continuous effort is being undertaken by regulatory bodies to assess and audit
the state of preparedness of air transport operators and service providers falling
within their authority. Particular attention is being paid to the evaluation and
testing of systems which interface between different players and countries, owned
by aircraft operators, air traffic control and airports.

transport, where potential
Given the inherent cross-border nature of air
disruptions originating in one country could have repercussions on many others,
international co-ordination requires setting common standards and agreeing
specific timetables for achieving compliance of computer-based systems.

The International Civil Aviation Organisation (ICAO), in an Assembly which
took place in September 1998, called on its members to disclose their readiness
status . This disclosure will be based on questionnaires, using criteria developed
by ICAO with the assistance of certain countries and IATA. These responses will
be extremely important, since they will form the basis for a global assessment of
the safety of airspace, leading to decisions by the civil aviation authorities on
which countries/airports to fly to at the end of this year.

EUROCONTROL has been very active in the area of Air Traffic Management by
raising awareness of the Y2K problem within its Member States, particularly in
national administrations providing air traffic services; as well as co-ordinating
and exchanging information with relevant
international organisations. The
emphasis of this co-ordination has now shifted to facilitating the development of
contingency plans, where a special task force has produced a set of guidelines.
Practical contingency measures are being developed within the Maastricht
operational centre, which is responsible for air traffic management in Belgium,
Luxembourg, the Netherlands, and Germany. These measures will entail the use
of military facilities as a fallback solution in a comprehensive plan designed to
address various scenarios involving technical disruptions.

In the European Civil Aviation Conference (ECAC), a special group is
determining the scope of actions to be undertaken under the ECAC umbrella, to
complement the Y2K initiative of ICAO. This group will prepare policy proposals
for the Directors General of Civil Aviation.

An International Air Transport Association (IATA) Y2K project for the clearing
systems which they operate for travel agents is progressing satisfactorily. A Y2K
Industry Project began in June 1998. Within this project, IATA carries out site
visits to certain airports and air traffic control services. The majority of these
visits planned for Western Europe were completed by mid-February 1999.
Although the global picture appears positive, several issues have been identified,
particularly in the smaller airports. In some cases the necessary political will is

7

... and associations for
airports, certification of
aircraft, ...

not apparent, and a low priority is being given to the problem. Several
programmes suffer from a lack of finance and manpower. Dependencies on third-
party providers are not always covered.

The Airports Council International (ACI) role continues to be one of raising
its members, sharing expertise, and assisting in finding
awareness amongst
solutions. ACI has developed a check list for assessments and advocates
contingency planning. The Joint Aviation Authorities (JAA) continues to pursue
initiatives with responsible authorities and organisations in connection with
certified aircraft and maintenance.

... and aircraft
manufacturers are all
involved in solving the
problem together

AECMA members (an association of aircraft manufacturers) indicate they are
well advanced in their efforts to ensure compliance and confirm that there are no
safety problems with non-modified original aircraft, or with aircraft modified by
the manufacturer. Some remedial work remains to be done in non-critical areas,
which is expected to be completed during the next few months.

Based upon the available information,
the aviation industry appears well
advanced in its preparations to combat potential problems, following a thorough
methodology which includes raising awareness, assessing systems, rectifying
problems, and developing, testing and validating contingency plans.

Nevertheless, there are outstanding issues. Where necessary, additional efforts to
raise awareness must be made. Greater sharing and dissemination of information
is important to avoid duplication of effort. Many organisations including ATC
providers, aircraft manufacturers, airports, etc. are still
lacking essential
compliance information from third-party vendors and providers. Further efforts to
develop and validate contingency plans need to be encouraged.

4.1.2 EU Aviation
Throughout the EU, all players in the aviation sector are actively co-operating to
ensure that air travel remains as safe during the changeover period as it is today.

Major EU aircraft suppliers, such as Airbus, have extremely thorough Y2K
projects, comprising design office and system rig tests, as well as a real flight
rollover on both A320 and A330 aircraft, where the date was changed in flight
during August 1998. The onboard data source (clock) accepts both manual entry
and automatic dates from the Global Positioning System (GPS). The only error
detected was created by the date change affecting the recording of the correlation
between in-flight incidents taking place before and after midnight.

As far as aircraft navigation systems are concerned, the results thus far indicate
that such systems make little use of dates in a format where there is an explicit
reference to the year. In real-time systems, references to time are made almost
exclusively on the basis of hours, minutes and seconds. Only systems used for
regulating air traffic, as well as systems for recording and archiving data make
use of the full date. Aircraft navigation systems are supported by a number of
fallback systems, based upon the use of various different technologies and with
comprehensive contingency plans for ensuring traffic safety. It is worth noting
that the density of air traffic is generally lower at night, and even more so on New
Year’s Eve. In the event of problems, contingency plans take into account the
need to delay or reroute aircraft.

8

Thorough testing by
aircraft manufacturers
of their craft...

...and of navigation
systems is reassuring...

...and regulators will
withdraw authorisation
from any unsafe
operators

Although extensive contingency plans are being developed and implemented by
individual companies, information on international strategies and developments is
needed to complete such plans. The aviation industry is being advised by
regulators that if they are not satisfied with Y2K compliance programmes and
they have safety concerns, action will be taken to withdraw operating
authorisations.

Maritime transport
could be affected by
Y2K...

...both onboard and
ashore

The IMO took the
initiative...

...to adopt a code of
good practice...

4.2 Maritime Transport

There is little doubt that the millennium bug will affect maritime transport to a
similar degree as it will other modes of transport. In this sector, there are two
main levels where disruption could occur. These are the ship itself as a
transportation unit, and the environment wherein ships operate, the ports and
terminals.

The consequences on board vessels might be as simple as a failure in a timer or a
GPS receiver, or as sophisticated as the malfunctioning of the monitoring and
control system for the main engine plant or of the navigation and communication
systems, which could result in a loss of power or steering. Ashore, the areas
effected could be as diverse as the actual services offered by ports and terminals.
Problems could occur in communication systems, in cargo and document handling
systems, or in the provision of radio navigation assistance - essentially in any
computer-based systems.

International Activities in the Maritime Sector

4.2.1
In order to assist the shipping industry in addressing the Y2K problem, the
International Maritime Organisation (IMO) has issued two circulars on the
matter1. The first circular invited Member Governments to bring this problem to
the attention of ship owners, ship operators, shipmasters and other interested
parties in the shipping industry. Referring to the guidance notes prepared by the
United Kingdom on the issue, the circular encouraged all concerned to become
familiar with the nature of Y2K problem, to assess the potential impact on their
operations, and to take the necessary actions to upgrade, replace, or retire affected
systems. The second circular recommended that ships participating in mandatory
reporting systems be requested to co-operate with the relevant authorities in
providing information on the status of their Y2K preparations.

issues

At the initiative of the United States Coast Guard and the United Kingdom
Maritime and Coastguard Agency, a meeting was held in IMO in March 1999 to
consider
relating to the Y2K problem. Representatives of non-
governmental industry organisations were invited to participate. The meeting
unanimously agreed to adopt “The Year 2000 Code of Good Practice”, and
defined key elements of a general Y2K contingency strategy for ships, ports and
terminals. Member Governments of IMO were invited to bring these results to the
attention of the maritime industry as a whole2.

1

2

MSC/Circ.868 of 27 May 1998 and MSC/Circ. 894 of 17 December 1998

Circular letter 2121 of 5 March 1999

9

...including
recommendations for
contingency planning

The Code of Good Practice recommends measures and precautions for ships,
ports and terminals to reduce the risk associated with possible malfunctions of
equipment which might be dependent on electronic date recognition. In particular,
it recommends the use of a set of questionnaires to be filled in by shipowners and
ports/terminals, and shared between them in order to facilitate communication on
the subject. If the information which is provided creates concern as to whether a
planned operation can be conducted safely, then masters, port authorities or
terminal operators could decide to suspend or postpone the operation. The key
elements of Y2K contingency plans for the industry are provided in a short guide,
aimed at assisting those in the maritime transport industry to understand those
elements which may supplement/complement existing emergency response plans.
The signatories to the Paris MOU on Port State Control3 have decided to issue a
letter, intended to raise awareness on the millennium bug, to all shipmasters of
ships inspected in the framework of the Port State Control in Paris MOU ports.
The Paris MOU group will also investigate the possibility of taking action against
individual ships as the critical date approaches, should shipmasters fail to provide
a satisfactory response to queries concerning how the potential risks have been
addressed on board their ships.

The involvement of international organisations and the international exchange of
information is thus essential to the overall co-ordination of the maritime sector.
Other organisations which must co-ordinate with the IMO include the
International Association of Lighthouse Authorities, as well as the organisations
responsible for shipping for the larger rivers, such as the Rhine.

4.2.2 EU Maritime Transport

EU Port Authorities
and shipping companies
are progressing...

...and certification
schemes for Y2K are
created...

Throughout
the EU, port authorities and individual shipping companies are
generally making progress, although this is more apparent in the larger firms.
Greater efforts are needed to develop common approaches to be implemented by
port authorities, and increased attention needs to be paid to solving the millennium
problem at the level of individual ships. The French navy, in its Y2K system
inventory, noted that its distance navigation system (SYNEDIS) was currently not
compliant, and decided that traditional means of navigation would be used as a
fallback solution.

Contingency plans are being developed and implemented by each port. A
certification scheme for ships is being proposed and will be implemented, which
will mandate the need for a certificate to be provided before entry will be granted
to major ports. As far as local shipping is concerned, in countries such as the
Netherlands, ships will be licensed through a joint initiative between insurance
companies and sectoral organisations. A similar scheme is proposed for ships
registered in foreign countries.

3

Composed of Belgium, France, United Kingdom, the Netherlands, Germany,
Finland, Sweden, Denmark, Italy, Greece, Spain, Portugal, Ireland, Norway, Croatia,
Poland, Russian Federation and Canada.

10

...but more information
is needed

Several countries commented that for the most part, the maritime sector was
providing relatively little information thus far, and that few companies had
reported that they were establishing Y2K contingency plans.

Several potential
sources of problems
exist in rail transport...

with interconnections
between systems being
of particular concern

4.3 Rail Transport

4.3.1 Overview
Rail operations and the rail infrastructure are very closely linked and numerous
is not appropriate to make a
railway companies remain integrated,
distinction between providers of infrastructure and operators of transport services
in the context of the year 2000 problem.

thus it

There are a number of different IT systems used by railways in which problems
of compliance could arise. These include both central and local IT systems, many
of which are mainframe based and are used for general management purposes or
to provide specialised services such as ticketing, reservations and passenger
information, as well as the embedded chips located in locomotives, signalling,
crossings, lifts and escalators, air-conditioning and ventilation systems, etc., and
the interconnections between railway IT systems used to transfer data concerning
international operations. Additionally, the IT systems of those suppliers on which
the railways depend to provide electricity, telecommunications and diesel fuel may
also experience problems.

In principle, non-compliance could create several problems. It is unlikely to
compromise safety, since generally IT-based signalling is only one layer of a
system, however, it could disrupt rail traffic or services to freight and passenger
customers. Ensuring the compliance of the interconnections between the railways’
IT systems is a particularly complex task (these systems are used for transferring
traffic
information about
management). Data is exchanged through links between individual IT systems in a
largely virtual network. While components of this network have been checked,
end-to-end tests have not been carried out.

than for signalling or

international

trains,

rather

The UIC is taking
action...

To respond to concerns about these potential difficulties, the International Union
of Railways (UIC) intends to hold a seminar on embedded systems, to organise
end-to-end tests of the interconnections between various railway systems, and to
create a back-up team to help railways experiencing difficulties. The UIC has also
facilitated the exchange of information on the Y2K problem in this sector.

...although compliance
is being addressed on a
national basis in the EU

4.3.2 EU Rail Transport
Compliance is being tackled by each railway on a national basis. The railways
generally began their Y2K work during 1996 and 1997, starting with an inventory
of IT systems and classifying each system as being critical or non-critical. They
are now in the process of testing systems for compliance, with work on IT
systems apparently in advance of that on embedded systems and international
connections. A significant proportion of their IT systems are not compliant and
are thus being modified or replaced (some railways see the year 2000 problem as
an opportunity to modernise IT). Key systems which may be affected are those
relating to the maintenance of trains, equipment, and buildings. In the systems for
signal authorisation, and those authorising the speed of the French TGV, for
instance, no use is made of dates. The railways are demanding certification of

11

Satisfactory progress,
with regulators playing
a leading role

.

Road transport uses
systems that could be
affected...

...and organisations at
various levels are active

compliance from major suppliers but will find it difficult to obtain information
from all suppliers.

Compliance is being tackled by each railway on a national basis. Overall progress
in this sector is therefore deemed to be satisfactory, with the larger firms making
good progress. Generally, no sectoral contingency plans are being developed, the
individual companies are responsible for their own contingency planning.

Regulators are generally taking the leading role in the assessment of business
continuity aspects, as well as safety aspects. Audits are being performed and the
results kept under review. Risks are limited in this sector, primarily associated
with the power supply and the international context. Minor and limited
disturbance to local information systems for passengers cannot be excluded.

The Netherlands noted that no rail transport is planned during any year end period
for several hours before and after midnight.

4.4 Road Transport
The comprehensive EU road network makes use of a number of electronic
systems in order to ensure a smooth flow of traffic. These include surveillance
systems, weighing stations,
toll booths, monitoring and management systems
which collect, analyse and disseminate traffic information, signalling, dynamic
navigation systems, and security systems for highway emergency services, as well
as the technical systems responsible for the operation of equipment such as
lighting and ventilation.

The risks associated with a malfunction may be direct, in the case of problems
with signalling or the operation of lights, or indirect, should traffic management
systems be unable to cope with a critical situation. Priority is generally being
given to the overall traffic information systems at national and regional level,
traffic signalling, highway emergency service networks, and central management
systems for tunnels.

The large integrated management systems used to control traffic in urban areas
are complex and it is consequently more difficult to assess the Y2K impact. The
compliance of road traffic/transport systems is being addressed at various levels.
Both private companies and public administrations are responsible for different
components of the road network.

The Y2K impact on cross-border information services should be limited, as the
European
the
national/regional centres of most of the EU Member States will only become
operational in 2000 and 2001.

electronic

exchange

between

network

traffic

data

of

5 TELECOMMUNICATIONS

5.1 Overview

The telecommunications
infrastructure is
critical...

The global telecommunications infrastructure as a whole is critical in assuring the
flow of information to support the operation of many industries and services, as
well as for the Internet, voice, data, fax, and other telecommunication services.

12

...and efforts depend on
the reliability of
interconnections...

...and the large number
of operators

Most consumer
equipment will continue
to work

Consequently, even where individual elements of telecommunication services are
considered to be Y2000 compliant, their normal functioning will still depend upon
the reliability of interconnections within the overall infrastructure, particularly
interconnections between operators and across borders. This is of course equally
relevant
internationally as within the EU, since a significant proportion of
European communication traffic is routed globally.

As a result of the liberalisation of telecommunication services and infrastructure
in many parts of the world, including the European Union, a wide range of
the communication
competing operators are providing different parts of
infrastructure. It is therefore the responsibility of each operator to ensure that all
their interconnections with other operators are Y2000 compliant. To ensure
business continuity, operators may make use of alternative and redundant circuits
and routing possibilities, as appropriate.

The risk of disruption to communication services is primarily associated with
software used in network operators’ systems. Most consumer equipment, such as
telephones and fax machines, should continue to work as normal. Problems are
more likely to be encountered by people using PCs to access networks (such as
the Internet), where the PC may not be Year 2000 ready, or by small businesses
with private switches which have date-dependent functions.

5.2

International Activities in the Telecommunication Sector

The key role of the
ITU...

Recognising the scale of the threat posed by potential Year 2000 computer
failures and the critical role played by the globally deployed telecommunications
networks, the International Telecommunications Union (ITU) established a Year
2000 Task Force in March 1998.

The terms of reference of the Task Force are to:

•

•

•

•

•

raise the awareness of all telecommunication Operators and Carriers of, and
to provide information on, the Year 2000 problem (Millennium Bug);

advise on compliance standards;

seek to establish the position of all Operators and Carriers, including an
understanding of their timescales for compliance and to influence this where
appropriate;

seek agreement to, and promote, a sharing of information within the
telecommunications community and with customers;

promote the cross fertilisation of year 2000 best practice amongst the
membership.

In pursuing this mandate, the Task Force set out to ensure a high level of
awareness amongst its members of the issues at stake and to establish a
comprehensive set of guidelines and tools that would assist organisations in
reaching identified levels of year 2000 compliance. As part of this activity, the
Task Force has surveyed the major operators to obtain forecasts of readiness,
both within Europe and internationally. The Task Force reports that the level of
response to date has been high, with the majority of respondents reporting that
they expect to achieve compliance by mid 1999 or earlier.

13

...includes surveys of
preparedness, ...

...and inter-carrier
testing

Overall indications of
good progress

Main dependency is on
the power supply

Operators are working
together

Some countries have an
integrated approach to
communications

In recognition of the need to ensure not only the compliance of individual
operators but also the requirement to ensure global interoperability, an Inter
Carrier Testing Sub Group has also been set up. The goal of this Sub Group and
its Global International Gateway Testing strategy is to publicly demonstrate the
telecommunication industry’s Year 2000 international readiness. The end goal of
the testing effort is to ensure that the full inventory of international gateway
switch types throughout the world are all tested, with results published by the
third quarter 1999. Any identified gaps or problems will be addressed through
contingency plans and testing during the fourth quarter 1999.

EU Telecommunications

5.3
As in other sectors, the overall indications are that larger businesses in the EU are
making good progress in their preparations for the millennium date change,
although smaller businesses may be less well prepared. Regulatory authorities are
monitoring progress in the sector. Interconnectivity tests are taking place between
suppliers and EU operators participate in the ITU activities.

this sector

The primary dependency of
is on the power supply. Public
telecommunication providers have contingency plans and disaster recovery plans
to enable them to deal with failures that might occur, as well as internal
procedures for prioritising telephone calls in emergencies, and a dedicated
emergency planning staff. Several countries reported that at national level, a
private telecommunication service is available to government users in emergency
services such as defense, the police, and civil protection authorities.

The operators in countries such as the UK have formed a self-help group to
present a common front
to equipment suppliers, and to ensure millennium
compliant software and hardware are supplied on time. Network operators are
working together to ensure that equipment manufacturers are carrying out tests of
new network equipment. Peer assessment is also proving very effective at solving
any detailed technical problems with companies’ software and hardware.

Some countries, including the Netherlands and Sweden, report adopting an overall
approach to communications, which integrates related services such as mail and
broadcasting systems. Certain telecommunication providers
are making
information packs
and private users of
telecommunication equipment. They are raising customers’ awareness of the
possible effects to equipment at customer premises and taking steps to address
this with the suppliers of terminal equipment.

available both to corporate

It is recognised that companies outside the EU may not be equally well prepared.
EU organisations are liaising bilaterally with other administrations, sharing best
practice and encouraging overseas operators to do all that is necessary to ensure
that their networks are prepared.
6 NUCLEAR SAFETY

6.1 Overview

There is a potential
impact of Y2K on
nuclear safety

There are a number of potential problems in nuclear power plants (NPPs) relating
to safety which can be associated with the Y2K problem. The first of these are the
direct safety issues, which concern the software, hardware, and embedded chips
used in safety-related systems. The relationship between power plants and the

14

electricity grid or other generation facilities may also induce problems. Should
grid problems arise, it is important that back-up mechanisms, such as batteries
and diesels, operate to ensure emergency electricity supply to cooling systems.
Finally, there are also concerns that multiple failures, though not intrinsically
unsafe in themselves, could unduly overload NPP operators.

6.2

International Activities on Nuclear Safety

WANO, the World Association of Nuclear Operators, has taken initiatives since
its members. The
1998 to raise awareness and share information amongst
International Atomic Energy Agency (IAEA) has launched a special project to
address the Y2K problem for NPPs (particularly in CEEC, NIS and China). It
plans to organise a comprehensive assessment between March and June (based on
followed by a phase of contingency planning. This
guidance documents)
assessment phase will be implemented by small teams of Western experts, in co-
operation with local operators. In the short term, these Western teams need to be
set up, managed and funded. The assessment teams will report in May or June,
providing a clearer picture of future needs.

6.3

EU Nuclear Safety

All Member States with operating NPPs have a programme to address the issue.
Although each programme differs in detail, each requires the licensee to identify
systems that might be affected, to rank them by nuclear safety significance, to test
each in turn and to modify or replace any that fail. Regulatory authorities are
reviewing the content of these programmes and are monitoring their execution. In
some Member States, attention is now turning to risk mitigation planning, such as
requiring increased operating staff numbers and avoiding maintenance activities
over the critical dates.

in regular contact with relevant

The Commission is
industrial groups
(FORATOM, WANO, EURELECTRIC, UNIPEDE) for information on their
activities. The Commission has raised the Y2K issue for discussion with Member
State regulators in the relevant working groups, promoting the spread of best
regulatory practice. There is no perceived need to increase the Commission’s
activities with respect to Y2K compliance of NPPs in the Member States, since
they are already adequately addressing the issue.

All countries with NPPs report that these sites are monitored closely by the
regulatory authority concerned, and are normally required to operate within strict
rules and with adequate contingency plans, which are checked and validated on a
regular basis. The design specifications of these sites require safe operation in
case of emergencies. Safety mechanisms in these plants are generally independent
of computerised systems, thus it is very unlikely that there will be problems
created by Y2K.

15

Rigorous programmes
are in place throughout
the EU...

...which are closely
monitored by regulators

Possible sources of
concern in CEEC and
NIS

The Commission’s role
– encouraging the
exchange of information
between nuclear
regulators,...

...supporting
programmes...

6.4

Nuclear Safety in Central and East European Countries (CEEC) and
New Independent States (NIS)

Despite the relatively limited use of digital logic in safety-related systems in
eastern European NPPs, there are known to be Y2K problems with some systems.
Special attention must be paid to recently installed equipment, some of which may
have been provided with support of the PHARE and TACIS programmes. Given
concerns that the preparations of the electricity sector in these countries tend to be
less advanced than those of the EU, the likelihood of grid problems arising may be
greater, also increasing the possibility of overloading operators.

All these countries are reportedly taking measures, however, it appears that the
level of awareness and action is not homogeneous. WANO considers that it is
currently hard to judge to what extent adequate action has been undertaken in
CEEC/NIS, other than in the Czech Republic, Slovakia and Hungary. WANO is
encouraging the more experienced of its Western members to second experts to
eastern NPPs.

The Commission’s CONCERT group, (consisting of the senior nuclear regulators
of 25 EU, CEEC and NIS countries) discussed the issue in June 1998 in order to
increase awareness. The success of this policy was demonstrated in January
1999, when all CEEC and NIS nuclear regulatory authorities presented action
plans, several developed following the 1998 meeting. The content of these plans
and their state of progress varies. Some countries report being as well prepared as
their EU counterparts, while others are significantly less advanced. In the January
1999 meeting, the regulators encouraged the Commission to consider further
action. They welcomed an offer of assistance to regulators (requests have been
received from Bulgaria and Slovakia) and urged the Commission to support the
IAEA programme addressing NPPs.

The G-24 Nuclear Safety Assistance Co-ordination (NUSAC) secretariat, hosted
by the Commission, raised the Y2K issue at its March 1999 meeting. The meeting
brings together CEEC and NIS countries and the donors of nuclear safety
assistance. The meeting considered the role of donor countries in assessing the
Y2K compliance of equipment that they have supplied.

in Moscow is
The International Science and Technology centre (ISTC)
establishing a special fund (1.35 M$ are currently pledged) to assist Russian and
NIS institutions in solving issues related to the Y2K problem,
involving
individuals and teams from the former weapon research institutes. The ISTC
funds will support co-ordination of the definition of appropriate methodologies,
assist Minatom and other institutions in conducting projects leading to the
implementation of practical Y2K solutions, and assist in the provision of specific
international expertise.

Considering the tight time scale and the absence of any mandate for the European
Union to take an initiative,
the Commission should focus its main effort
onsupporting the IAEA work, which is based on a clearly defined methodology,
and supporting the ISTC initiative by reinforcing the current contribution to the
ISTC budget
immediate
assistance through concrete projects in the NIS. The Commission will make best

the ISTC providing practical

foreseen for Y2K,

16

use of the TACIS on-site assistance programme with EU nuclear operators, who
will be fully integrated into the IAEA scheme. Discussions are taking place with
the IAEA to further assess the practicalities of Community support. In addition to
supporting the IAEA assessment teams, the Commission will investigate whether
resources could be put in place to address needs identified by these teams.

...and providing direct
on-site assistance

The Commission has also asked that the issue be raised in the framework of the
PHARE and TACIS regulatory assistance projects.
In these projects, EU
regulators are in permanent contact with their CEEC and NIS counterparts at
working level, and so are well placed to raise their awareness.

EU countries also carry
out bilateral activities

(at Leningrad NPP). At

In the framework of the EU TACIS on-site assistance programme, the issue has
already been taken up by one contractor
the
Commission’s request, the issue was also addressed at the last on-site assistance
meeting organised by WANO in November 1998. In December 1998,
the
Commission requested TACIS on-site assistance contractors to ensure the Y2K
compliance of equipment delivered under EU programmes. In the early 1999, the
Commission initiated a new inquiry with all the EU utilities involved in the on-site
assistance programme to raise awareness. The most recent on-site assistance
contracts include a provision to address the issue at the specific sites.

The UK Department of Trade and Industry funded a study4, the results of which
were circulated to utilities participating in the TACIS on-site assistance
programme. Finland has provided assistance to the Leningrad NPP near Saint
Petersburg and to the NPP in the Kola peninsula. Further reports on bilateral
actions have been requested from Member States.

For all activities, the target date for completion is October 1999, since last minute
modifications to NPPs or to procedures run the risk of introducing more problems
than they resolve.

7 FINANCE

7.1 Overview

The financial sector
considered most
advanced

In the EU, as elsewhere, the financial sector is still generally considered to be the
most advanced sector. Certain EU countries noted that
financial
organisations had tended to delay their year 2000 adaptation processes, due to the
changeover to the euro. However, this has had a generally positive result. All
institutions of the four financial services sectors (banking, insurance, securities,
payment systems) have undergone an exercise of parallel euro and Year 2000
adaptation projects. In some cases, new wholesale payment systems have been
specially developed in the context of the introduction of the euro, taking into
account the need to be Year 2000 compliant.

their

4

The Millennium Problem. Raising the awareness of nuclear power station

operators and regulatory authorities in Central and Eastern Europe, September 1998

17

EU financial services
have benefited from the
introduction of the euro

The sector is in the
testing and contingency
planning phase

The insurance sector is
considering policy
holder risks

Information to the
public could be
improved

International co-
ordination activities

International testing

The euro changeover has had another benefit, in that many of the contingency
strategies for Y2K are being based upon the contingency measures adopted for
the euro changeover. In particular, the preparations for the euro changeover
weekend (internal task forces and help desk, mutual contact lists with external
parties, back up of data-bases and applications, build up of additional processing
capacity and disk space, postponement or reduction of certain operations), are all
contributing to contingency planning for the Y2K rollover in the financial sector.
The successful experience of EU financial institutions in coping with the similar
euro changeover challenge has generated confidence in the ability of companies to
implement such changes successfully.

A positive widespread trend in the four financial services sectors is that firms are
generally now in the process of completing the final phases of their Y2K projects,
specifically testing and contingency planning. Less positive is another common
occurrence in these sectors, which is a tendency to underestimate risks not directly
associated with information system failures (credit risks, potential
liquidity
tensions, and litigation). Although these issues have been identified as potential
problem sources, firms may lack the resources, time, or simply the ability to take
appropriate measures in order to protect themselves against such risks.

The insurance sector is systematically taking into account the Year 2000 related
risks of its customers, due to the fundamental nature of its activities. In deciding
how to assess and handle these risks,
in EU
countries. Countries such as the UK have decided not to cover Y2K-related risks;
others, including France and Belgium, have decided to cover them provided their
involving material and/or physical
clients have suffered a serious sinister,
damage, in spite of having taken all appropriate possible actions to be Year 2000
compliant.

two approaches are apparent

The supply of information to the public by the financial sector could still be
improved. Many companies have yet to adopt proactive strategies to disclose to
the public their Year 2000 situation. This lack of attention could impair the
competitive position of the entire financial system, in spite of the substantial
progress which has been made.

7.2

International Activities in the Financial Sector

The main international organisations involved in the financial sector are the
Global 2000 Group, an informal grouping of banks, security firms, and insurance
which facilitates efforts by the global financial community to improve the
readiness of financial markets to meet the challenges created by the Year 2000
changeover, and the Joint Y2K Council, a grouping of international associations
of financial regulators and supervisors.

Global testing of payment and settlement systems is planned. EU National Central
Banks (NCBs) are fully involved in these international tests. The impact of the
transition to the year 2000 on the insurance industry and the measures needed to
cope are under discussion5. The Y2K problem is also being analysed by both the
OECD’s insurance committee and IAIS.

5

111th Conference of EU insurance supervisors, Amsterdam, October 1998

18

IAIS, the International Association of Insurance Supervisors, sent a questionnaire
to all its members in December 1998. 43 countries replied, including 12 EU
countries. A summary of the results has been available since March 1999. The
risks which were most frequently mentioned by insurance supervisors were the
possible failure of internal IT systems leading to business disruption and
corruption of records; their dependence on suppliers; and an increase in claims,
particularly in liability insurance. Two thirds of the respondents reported that
insurance companies in their country expect an increase in their liabilities in non-
life insurance; only seven respondents also expect it in the life sector. Of greater
concern is the fact that only 11 respondents report having given advice to the
firms under their authority on the technicalities and consequences of additional
claims. IAIS has developed a document on contingency planning in the insurance
sector which will be widely distributed to insurance companies and national
inspection bodies.

7.3

EU Finance

Various bodies are active in the supervision of banking institutions, including the
European Central Bank (ECB), NCBs,
supervisory authorities, national
administrations and regulators, as well as professional organisations, both at
national and European level. The Banking Advisory Committee, where national
supervisors, NCBs and Finance Ministries meet regularly, represents another
forum for the exchange of information on national monitoring activities in the
banking sector. This monitoring involves both information recollection and ad-hoc
checks, as well as the co-ordination of multilateral testing. Supervisors and other
national authorities are using a wide variety of sources of information in this
respect - the firms themselves, professionals engaged in tackling the problem
(such as auditors), and commercial rivals. In addition, regulators in this sector
tend to have extensive knowledge of the systems’ expertise, controls and
personnel of the firms supervised.

Generally, those banks and financial institutions in the EU which are subject to
supervision have completed their internal adaptations, with many involved in
internal testing. Nearly every EU country reported that national external testing
would take place during the second and third quarters of 1999. As far as payment
systems are concerned, the ECB is requesting each NCB to monitor closely the
progress of RTGS systems within the framework of the TARGET changeover to
Y2K, implementing compulsory deadlines for action - internal IT testing to be
completed by the end of April; multilateral testing to be completed by the end of
July; final certification systems to be in place by the end of September; and
contingency testing (no deadline has yet been defined). Testing tends to be
complex, involving a series of integrated tests on national clearing and settlement
procedures with the involvement of all payment system participants. Retail
payment systems, including ATMs, credit transfers and TPOS (terminal payment
at point of sale), are also being thoroughly tested.

Close monitoring of
banks

External testing
foreseen in 2nd and 3rd
quarter of 1999

Action is being taken
against laggards

Some countries noted that delays had occurred to Y2K project schedules within
the banking sector, primarily attributable to suppliers having delayed their
delivery of year 2000 compliant products. Insitutions which appear to be falling
behind schedule are being addressed in several ways. In Italy, formal letters are
being issued and on-site examinations carried out. All companies under

19

Security firms are
required to disclose
status of readiness

Insurers are being
asked to analyse
portfolios

Some countries have
created a platform to
assess Y2K claims

supervision must submit a self-assessment declaration, signed by Senior
Management and/or the Board of Directors, stating the preparedness of the
institution. The Nederlandsche Bank will request those banks which continue to
encounter problems and which are in arrears to report on further progress on a
monthly basis. Regulators have made it clear that firms which fail to implement
appropriate measures will face regulatory intervention.

As far as securities firm and the stock exchange are concerned, EU regulators
supervise regulated markets and market management companies, including the
behaviour of intermediaries, and ensure proper disclosure by issuers. In many
countries, such as Finland and Italy, supervisors and regulators are requiring
detailed information on Y2K readiness to be provided in financial statements
and/or certain reports. National arrangements are in place to carry out
appropriate testing on settlement dates. Italian firms report that as part of their
contingency planning, a back-up link has already been established by
intermediaries for orders and pre-matching,
intended to assist with disaster
recovery.

In all EU countries, insurance companies have informed their customers, both
individual and business, about Y2K risks and the coverage of such risks under
their contracts, as well as their own responsibility for Y2K compliance. In some
countries, companies have adopted exclusion clauses to be inserted in new and
existing contracts. Certain insurers have even communicated with their larger
customers through questionnaires, both to determine their state of preparedness
and also to make them aware of the consequences of non-compliance. In Italy,
insurance companies were asked to include in their 1998 annual accounts an
analysis of the insurance portfolio subject to the Y2K problem, in this case
arising from Y2K failures of policyholders, as well as a quantification of the
associated costs. External auditors, appointed to certify the financial statements
of insurance companies, will specifically evaluate each company’s plans to
manage such Y2K risks.

The insurance company association- in France, the FFSA, has decided to create a
‘technical platform’ which will be available to all insurance companies from the
end of 1999. A network of 150 to 200 experts on Y2K problems will be
established, with knowledge covering many different aspects (PCs, embedded
systems, electronic equipment, production process computing, office computing,
etc.). Where insurance claims are made as a result of damages linked to the Y2K
problem, a single expert per case will be designated to evaluate the cause of
accidents due directly or indirectly to the Y2K changeover, and to assess the
adaptation measures and contingency planning undertaken by the firms involved.
The platform will be in place throughout 2000, and is intended to facilitate a
quick, independent, consistent, and indisputable expertise, in order to prevent
long-lasting claim procedures. Belgium is another country where the sector has
decided to prepare itself by implementing a common technical platform.
8 WATER

Activities in the water
sector are occurring at
local level, ...

Although activities in this area have generally had a late start, the water supply
and waste water treatment sectors in the EU have recognised the threat posed by
the millennium bug and now report making progress.
instances,
monitoring activities in this sector tend to be carried out at local level. In many
countries, there are no national regulators, but instead national associations of
20

In most

...where strict
contingency regimens
already exist

Key issues are energy
and IT supplier
dependencies...

water companies. In Denmark, the Ministry for Research and IT carried out pilot
projects in this area, in co-operation with the National Association of Local
Authorities, distributing the results to municipalities.

The water supply sector normally implements strict contingency regimens which
are required by law. Compliance programmes are currently preparing Y2K
contingency arrangements for water supply, distribution and reclamation, and
reviewing major incident plans and manpower planning arrangements. In the
Netherlands, for example, there is a general requirement for 10 days of full
operations without new supplies of energy and chemicals (based upon individual
back-up power sources), and 20 - 25 days supply of fresh water without need for
a new intake of water, making use of existing water resources. Water company
contingency plans normally address how automated systems can be replaced by
manual control in the event of problems. Such plans are being checked for
millennium-specific aspects.

With respect to waste water, most countries report that separate ministry and
local government bodies are responsible. Each is therefore responsible for its own
millennium projects, including contingency planning. This sector is dependent
upon energy for its operation. Limited services can be provided when normal
resources are unavailable. The sector is making progress, although supplier
dependencies are of concern because the lack of information on certain technical
installations.

...with the main risk
being pollution

The main risk identified in the sector is the possibility of pollution of water intake
from major rivers as a consequence of the millennium problem, including
pollution from nuclear sources.

9 INTERNAL COMMISSION ACTIVITIES

Commission initiatives
continue...

...with priority given to
internal systems...

The Commission continues to actively pursue the initiatives announced in its
Communication COM1998(102).

Top priority is being given to making its own systems compliant. Regular
meetings involving the Secretary General and Directors General keep progress
under review through the Co-ordination Group on Organisation and Management.

...and good progress
has been achieved

Since 1996, all DGs have been asked to include in their annual information plan a
specific plan to adapt their information systems to the Year 2000, with priority
given in the budget allocations to executing these plans.

End-to-end testing is
planned...

Particular attention is being paid to ensuring that work in progress on those
mission critical systems not yet compliant is completed in time. The verification
of the underlying infrastructure (hardware, system software, third party software)
is well advanced and compliance will be achieved in time. In 1999, a series of
individual tests in the DGs and a Commission wide end-to-end test will be
conducted. The end-to-end test will validate the compliance of information flows
in the areas of administrative, financial, statistical, documentary and office
information. Depending on the results, corrective actions will be strengthened and
prioritised.

21

...and non-informatic
aspects are being
addressed

Commission activities
to facilitate sharing of
information in the EU...

...include exchanges
between civil protection
authorities

An inter-service group, led by the Secretariat General and with representatives of
all DGs, oversees the ongoing Year 2000 activities within the Commission. Its
tasks cover mainly non-informatic subjects, such as the co-ordination of
contingency plans for assuring the continuity of essential services,
the co-
ordination of legal issues relating to Y2K, the general infrastructure aspects
related supplies) and
(including buildings, security systems,
information campaigns targeted at Commission staff and the public.

lifts, and all

As regards other European institutions,
the inter-institutional committee for
informatics (CII) is co-ordinating year 2000 compliant activities so as to ensure a
common approach to the problem. The Commission has also organised a
symposium with Member States and a joint conference with the Portuguese
Government to discuss the adaptation of European information systems to the
year 2000. Similar actions are planned with other Member States and for SMEs.

With regard to Commission actions to promote and facilitate an exchange of
information on the Y2K problem between countries and sectors in the EU, the
Commission continues to host regular meetings between national Y2K co-
ordinators and representatives from industry associations, with an increased
frequency during 1999. Throughout the Commission, the DGs concerned with
infrastructure sectors are liasing with appropriate associations and collecting
information.

Various actions are being carried out
in the Member States to ensure the
continuous functioning of alarm systems, including the mutual 112 number, and
to prepare the Civil Protection authorities for emergencies that might occur in
connection with the millennium date change. An exchange of experience on the
readiness of the emergency services has taken place during the meeting of the
directors-general for Civil Protection in Vienna on 21 October 1998, as well as in
the regular meetings of the permanent network of national correspondents in the
field of Civil Protection (PNNC). In accordance with the decision of the meeting
of the directors-general, the civil protection unit of the Commission services
ensures the circulation of relevant information.
10 CONCLUSIONS

Substantial progress
since the end of 1998...

It is important to note the substantial progress in addressing the Year 2000
problem in critical infrastructures which has occurred since the previous report of
the Commission was published in December 1998. This progress is reflected in
the much greater amount of information on the Y2K situation which is now
available to industry, consumers, and citizens.

...with important trends
emerging

There are a number of important trends which are now emerging across all
sectors, and throughout the EU as a whole:

•

•

The greater involvement of regulatory and supervisory authorities in
monitoring and auditing vital infrastructure sectors.

The co-ordination efforts being carried out by sectoral, national, and
international associations, which are examining the problem with their
members and establishing general contingency strategies and guidelines.

22

•

•

•

•

•

The increasing emphasis on bilateral, multilateral, end-to-end, and national
testing.

The growth in national and sectoral Y2K information campaigns, aimed at
maintaining public confidence by focusing on the state of readiness of
essential service providers.

The wider availability of information on progress, result, risks, and
contingency plans.

The development of “troubleshooting” actions by forerunners and
associations, designed to assist laggards in their efforts to catch up.

The recognition that, in infrastructure areas as in industry as a whole,
smaller organisations continue to lag significantly behind large companies
in addressing the Y2K problem.

• A dependency upon IT system suppliers to provide an accurate disclosure of
the compliance of their products, and where necessary, to deliver timely
upgrades.

Prior to 1999, many sectoral, national, and international organisations seemed to
be struggling to find an appropriate role for themselves in order to provide
practical assistance to their communities in preparing themselves for
the
changeover to the year 2000. However, now that companies are starting to focus
their attention beyond their internal systems, associations and organisations are
able to facilitate the exchange of information, to develop common guidelines, and
particularly important, to assist in contingency planning. The implementation of
undoubtedly become a
sectoral and international contingency strategies will
critical success factor for addressing the Y2K problem on an international scale.

In the EU today, the reliability of public utilities is so high, that the consumer
tends to take it for granted that they will continue to receive power and water, and
that they will hear a dial tone when they pick up the telephone. Nevertheless, no
utility provider would currently be prepared to give any consumer an absolute
is therefore not
guarantee of uninterrupted service on a particular day. It
surprising that suppliers also refuse to provide such guarantees during the
millennium changeover, at a time when the potential impact of external factors
outside their control on their own business operations is very difficult for any
organisation to quantify.

It is clear that companies and organisations throughout the EU have recognised
their responsibility to tackle the Year 2000 computer problem and are now
starting to demonstrate their success in doing so. The overall assessment is that
the risk of significant disruption to EU infrastructures during the millennium
period is limited. Any problems are more likely to be localised and occur in
smaller organisations. Since such risks, however minor, still exist, efforts are
ongoing in every sector to establish thorough, comprehensive contingency plans to
mitigate these risks.

23

Involvement of sectoral
and international
organisations in
contingency planning is
critical to success

The reliability of public
utilities in the EU is
very high...

...and the risk of
significant disruption is
correspondingly low

11 ANNEX

The following is a list of websites from which additional information can be
obtained.

National and government information:

UK

http://www.open.gov.uk/year2000 (UK plans/preparedness)

http://www.bug2000.co.uk (UK infrastructures – the results of
all assessments are provided on this website)

Greece

http://www.year2000.gr

Luxembourg

http://www.crpht.lu/an2000

France

http://www.premier.ministre.gouv.fr

http://www.an2000.gouv.fr (government)

http://www.industrie.gouv.fr/site/industrie/home/navi/page/indust
rie (industry)

http://www.justice.gouv.fr/publicat/an2000.htm (justice)

http://www.defense.gouv.fr/sdsic/a2000/index.html (defense)

http://www.equipement.gouv.fr/an2000/1000.htm
(transport/logistics)

http://www.education.gouv.fr/actu/an2000/plan.htm (education)

http://www.diplomatie.fr/actual/dossier/an2000.html
affairs)

(foreign

http://www.interieur.gouv.fr/an2000 (interior)

http://www.agriculture.gouv.fr/index.html (agriculture)

http://www.jeunesse-
sports.gouv.fr/francais/misan2000/index.htm (youth/sports)

http://www.santé.gouv.fr/htm/pointsur/an2000/index.htm
(health)

Sweden

http://www.statskontoret.se/2000/sfs.htm

http://www.2000-delegationen.gov.se/arbete/direktiv.htm

Spain

http://www.map.es/csi/2000.htm

Portugal

http://www.missao-si.mct.pt/P2000/index1.html (national site)

http://www.iapmei.pt/idex/informacao/ano2000.html (SMEs)

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http://www.inst-informatica.pt/ANO2MIL/2mil001.htm

http://www.min-plan.pt/menu/tforce/index.html

Switzerland

http://www.millennium.ch (national site)

http://www.efd.admin.ch/aktuell/2000/index.htm (public
administrations)

For the energy sector:

Netherlands

http://www.energie2000.nl

Italy

Spain

http://www.emp.nl

http://www.enel.it

http://www.endesa.es/2000/index.htm

http://www.repsol.es/webrepsol/esp/inversor/efecto2000.htm

http://www.miner.es

Greece

http://www.dei.gr/dei-en.htm

http://www.depa.gr/eng.index.html

http://www.dep.gr

Sweden

http://el2000.com/index.html

http://www.stem.se/om_myndigheten/y2k.html

Finland

http://www.finergy.com

http://www.fingrid.com

http://www.neste.fi/konserni/2000/index.html

http://www.gasum.fi/frindex_eng.htm

France

http://www.edf.fr (electricity)

http://www.gdf.fr (gas)

Luxembourg

http://www.cegedel.lu

Switzerland

http:// www.strom.ch (electricity)

http://www.erdgas.ch (gas)

Norway

http://www.enfo.no/index.cfm

http://www.statnett.no/y2k/index.html

http://www.npd.no/y2k/

For the transport sector in general

25

Spain

http://www.mfom.es

For the aviation sector:

Finland

Greece

http://www.ilmailulaitos.com/english/ (Civil Aviation Authority)

http://www.olympic-airways.gr

Sweden

http://www.lfv.se/sakerhet/y2k/y2krs03.pdf

Switzerland

http://www.atraxis.com

For the maritime sector:

International

http://www.ship2000.com (joint web site of the International
Chamber of Shipping (ICS), the United Kingdom P&I Club and
Lloyd’s Register)

Greece

Belgium

http://www.yen.gr

http://www.zeebruggeport.be

Sweden

http://www.sjofartsverket.se/frameset.htm

Norwayhttp://www.rederi.no/no/bibliotek/y2k/

For the rail sector:

Finland

http://www.rhk.fi/defeng.htm (Finnish Rail Administration)

http://www.vr.fi (Finnish State Railways)

Greece

France

http://www.ose.gr

http:// www.sncf.fr

http://www.ratp.fr

Sweden

http://www.banverket.se/framtiden/ar2000.htm

Switzerland

http://www.sbb.ch

For the road sector:

France

Greece

http://www.equipement.gouv.fr/an2000/1000.htm

http://www.oasa.gr (Athens Urban Transport Association)

26

For the telecommunication sector:

International

http://www.itu/y2k (summaries of individual company responses
to questionnaires can be found on this ITU web site)

UK

Spain

Greece

Sweden

France

http://www.oftel.gov.uk/bug2000.htm

http://www.sgc.mfom.es/efecto/efecto.htm

http://www.ote.gr (Hellenic Telecommunications Organisation)

http://www.cosmote.gr/e_mainpage1.htm

http://www.panafon.gr/en

http://www.pts.se/aktuellt/2000-rap.pdf

http://www.france.telecom.fr

Luxembourg

http://www.y2k.lu

Finland

http://www.sonera.fi/english/year2000.html (Sonera Oyj)

http://www.hpy.fi/yritys/vuosi2000 (Finnet Group)

Norway

http://www.telenor.no/bedrift/ar2000

Switzerland

http://www.swisscom.com/2000ok

For the Nuclear Power sector:

Finland

Sweden

http://www.stuk.fi

http://www.ski.se/

Switzerland

http:// www.hsk.psi.ch/aktuel.html

For the financial sector:

Netherlands

http://www.dnb.nl

Italy

http://www.bancaditalia.it

http://www.cipa.it

http://techinfo.sia.it

http://www.consob.it

http://www.borsaitalia.it

http://www.cedborsa.it

http://www.isvap.it

27

UK

http://www.bba.org.uk (information by the BBA on UK financial
sector preparations)

http://www.bankofengland.co.uk (contains the Bank of England’s
“Blue Book”)

Spain

http://www.cnmv.es/A2000/efecto2000.htm

http://www.ipyme.org/inipyme/prog4.htm

Greece

http;//www.hba.gr

Germany

http://www.bakred.de (Bundesaufsichtsamt für das Kreditwesen)

http://www.bundesbank.de (Deutsche Bundesbank)

http://www.bav-bund.de (Bundesaufsichtsamt für das
Versicherungswesen)

http://www.bawe.de (Bundesaufsichtsamt für den
Wertpapierhandel)

Finland

http://www.bof.fi (Bank of Finland)

http://www.rata.bof.fi/english/Faq/Faq.html (Finnish Supervisory
Authority)

http://www.hex.fi/y2k/index.html (Helsinki Stock Exchange)

France

http://www.afb.fr/pascfonb.htm

Portugal

Sweden

http:// www.paribas.com

http://interbolsa.pt/index.htm

http://www.fi.se/fffs/1998/fs9818.htm

Switzerland

http://www.swissbanking.org/e/Pages/swissbanking.htm

Norwayhttp://www.finans.dep.no

For the water sector:

Sweden http://www.slv.se/vatten/index.htm

France

http://www.generale-des-eaux.com

http://www.suez-lyonnaise-eaux.fr

http:// www.bouygues.fr

http://www.vvy.fi

http://www.mma.es/2000.htm

Finland

Spain

Denmark

http://www.dkvand.dk/index1.htm

http://www.kl.dk/siab.asp?o_id=1869

Norwayhttp://www.norvar.no

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