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 - Report of the Commission - Q2 1999 - 30 August 1999
Date: 1999-11-26
Institutions: European Commission
Subjects: computer system, economic infrastructure, impact of information technology, software, technological change

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 26.11.1999
COM(1999) 639 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

Report of the Commission

Q2 1999

30 August 1999

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Table of Contents

1

2

3

EXECUTIVE SUMMARY ..................................................................4

INTRODUCTION...............................................................................5

ENERGY ............................................................................................5

3.1 International Activities in the Energy Sector.....................................5

3.2 Commission Activities in the Energy Sector ......................................5

3.3 Electricity ............................................................................................6

3.4 Oil and Gas Production and Supply...................................................7

4

NUCLEAR SAFETY ..........................................................................8

4.1 Overview .............................................................................................8

4.2 International Activities on Nuclear Safety .........................................8

4.3 EU Nuclear Safety...............................................................................8

4.4 Nuclear Safety in Central and Eastern European Countries
(CEEC) and New Independent States (NIS) ......................................9

5

TRANSPORT....................................................................................10

5.1 Aviation.............................................................................................10

5.1.1

5.1.2

International Activities in the Aviation Sector ....................................10

EU Aviation ......................................................................................11

5.2 Maritime Transport..........................................................................11

5.3 Rail Transport...................................................................................12

5.4 Road Transport.................................................................................13

6

7

TELECOMMUNICATIONS ............................................................13

FINANCE.........................................................................................14

7.1 Overview ...........................................................................................14

7.2 International Activities in the Financial Sector ...............................14

7.3 EU Financial Services .......................................................................15

7.3.1

7.3.2

7.3.3

7.3.4

Banking: Lessons provided by the changeover to the euro ..................15

Payment systems: Business as usual during the rollover period...........17

Wholesale payment systems and infrastructure providers ...................17

Securities : a flexible approach for the exchange of information .........18

2

7.3.5

Insurance: A wider assessment of Y2K-related risks...........................18

7.4 Commission Activities in the Financial Services Sector...................19

8

9

10

11

WATER.............................................................................................20

COMMISSION ACTIVITIES...........................................................20

9.1 Internal Situation..............................................................................20

9.2 External Activities.............................................................................21

CONCLUSIONS ...............................................................................24

ANNEX.............................................................................................26

3

1 EXECUTIVE SUMMARY

The Commission continues with its quarterly reporting on the Year 2000
Problem by providing a mid-year update on EU preparedness in major
infrastructure sectors. As in previous reports, the information contained herein
is provided by national and regulatory authorities, as well as from European and
international organisations.

As expected in such a fast moving domain,
concerned have continued to evolve rapidly during 1999.

the progress and the issues

•

Several of the larger firms now report completing their Y2K preparations,
with the majority still expecting to finish in September or October, and
some even later.

• Detailed contingency plans are widely available, with co-ordination of
contingency planning activities at international level most apparent in the
electricity, aviation and financial sectors.

•

•

Some report delays resulting from dependencies on external suppliers
providing timely software or hardware upgrades, and there are also reports
of supplier claims proving to be unreliable when tested.

SME inaction is becoming increasingly critical, with every country
reporting that SMEs continue to lag behind.

Nevertheless, care must be taken in making generalisations regarding Y2K
preparedness at both sectoral and European level, since the business, technical
and cultural situation in each country is unique.

Contingency planning efforts have become much more focused:

•

Specific plans are being developed to manage the rollover period itself,
with many organisations expecting the greatest stress to occur on the first
working day of 2000, rather than on 1 January 2000.

• Early warning systems are being established - within sectors, nationally,

and between governments.

• Organisations are creating “command centres” or “crisis cells” to ensure

that they are able to react quickly to unexpected problems.

Apart from the actual readiness of organisations and contingency planning, the
key issue for the remainder of this year will undoubtedly be communication.
Although there are certain sectors in which the provision of information is
particularly of concern, the supply of information to the public by all sectors
should be improved.

The retention of public confidence is vital. Regardless of progress in addressing
the problem, if the companies and organisations involved do not communicate
their status and plans sufficiently well to their customers during the autumn, it
may well be assumed that the situation is negative. This assumption could have
a potentially severe effect on individual companies, and risks damaging the
credibility of the overall sector in which they operate.

4

A midterm update on
EU Y2K preparations in
1999.

Various agencies and
organisations are
disseminating
information on Y2K in
the energy sector

2  INTRODUCTION

In this report, the European Commission continues to facilitate the exchange of
information on the Year 2000 Computer Problem (Y2K) in the EU by providing
a mid-year update on the current situation of preparedness in 1999. As in
previous reports, the information which is presented here has been provided by
the relevant administrations, regulatory and supervisory authorities in the
Member States, as well as by European and international associations. Countries
which made specific contributions
include Austria, Denmark, Finland,
Germany, Greece, Ireland, Italy, the Netherlands, Spain, Sweden, and the UK.
Detailed reports on the transport sector were provided by most EU Member
States for
the Transport Council on 17 June, and the results are also
summarised. The overall reporting timeframe was mid-May to mid-July 1999.

The key sectors for which information is provided were selected on the basis of
their relevance in an international context. In accordance with the recent
in Cologne, The Commission places
invitation of the European Council
particular emphasis on cross-border and cross-sector
issues, and the co-
ordination of contingency plans between countries. The Commission is unable
to carry out an independent validation of the information provided herein. A
final report on the EU situation will be prepared in the autumn.

3 ENERGY

3.1

International Activities in the Energy Sector

The electricity supply industry in Europe, represented by Unipede/Eurelectric,
holds quarterly meetings where experts discuss their progress and co-ordinate
contingency plans. They will also discuss the possibility of implementing an
Early Warning System (EWS) for their members during their next Y2K meeting
in September.

The Nuclear Energy Agency (NEA) is also developing an EWS system, which
will make use of the Internet, particularly for reporting on the situation of
nuclear plants during the rollover. The International Atomic Energy Agency
(IAEA) will host an event concerning electricity grids and nuclear power plants,
to be held on 13 – 15 September in Sofia, Bulgaria. The International Energy
Agency (IEA) is also active on Y2K, hosting a number of seminars throughout
the world in order to increase awareness of the problem, particularly with
respect to the oil sector, including a recent workshop in Moscow with Russian
operators.

3.2 Commission Activities in the Energy Sector

A meeting of European
electricity grid
suppliers took place in
July

At the initiative of the Commission, representatives of the main European
electricity grids, including Central and Eastern European Countries and the
Newly Independent States, and of relevant international organisations, met on
22 July in Brussels to discuss the Y2K problem with respect to electricity grids.

This event provided an opportunity for an extensive and useful exchange of
views and experience, with the main results
summarised below. The
Commission indicated that it was ready to pursue assistance for appropriate
follow-up actions, if requested. The Commission, together with the Member
States, will continue to work on relevant issues at Community level, such as the

5

The electricity sector is
well aware of their
importance.

Electricity supply
systems have little date-
dependency.

Various contingency
measures are
envisaged…

…and operators expect
to be able to cope with
the predicted load.

co-ordination of contingency planning at European level and early warning
systems.

3.3

Electricity

Maintaining the operation of electricity grids during the Y2K changeover
period, as a vital link in electricity supply and occurring in mid-winter, is
essential. The electricity supply industry across Europe is fully aware of this
and has been devoting very considerable efforts to prepare for the Y2K
challenge. Nevertheless, unforeseen and possibly external disturbances to
electricity grids and their operation, including the loss of major customer loads
or faults in other services such as telecommunications or periphery systems,
cannot be excluded. Given the possibility of cascading effects in grid faults,
such efforts must continue, particularly on contingency measures and plans.

such as

radio or

In general, electricity supply systems, from generation, transmission through to
distribution, comprise electro-mechanical equipment which is not in itself date-
sensitive. Nevertheless, monitoring, control and other peripheral systems can be
date-sensitive, and care has been taken to identify such systems and rectify them
where appropriate. It should be noted that
these are not normally critical
systems, and electricity supply equipment can be operated on a manual basis.
Telecommunication links between key installations are vital, and most
electricity supply companies are taking measures to ensure that these links are
secure, and to establish back-up systems
satellite
communications.
Since the 1st January 2000 will be a Saturday occurring in a holiday period,
electricity demand is expected to be significantly below mid-winter peak
demand, although demand will naturally be affected by the weather conditions.
This means that considerable spare capacity is anticipated and many electricity
that they will mobilise this to substantially increase the
companies report
availability of reserves during the date change period, including instantaneous
reserves. The distribution and fuel mix of generation will also be designed to be
flexible and to be spread geographically, in part to avoid excessive loading of
the grid. Planned outages for maintenance will be avoided, but maintenance in
the run-up period will be increased. Staffing at key installations and mobile
teams will be augmented for the date change period. Particular attention will
also be paid as electricity demand builds up again in the first week of the new
millennium, bringing in new equipment, and for other date sensitive periods
such as 29 February 20001, although these are not thought to be as significant.

Difficulties could be created by the loss of major loads, with the possibility to
destabilise the grid, especially if flows in the grid were relatively low. However,
representatives of the electricity supply industry have indicated that even a
major consumer is usually relatively small in comparison to the supply network,
and in any case generation can be quickly reduced to maintain equilibrium.
largest
Furthermore, electricity supply companies are meeting with their
customers, who are themselves taking action to avoid Y2K faults, to better
anticipate demand requirements in the critical period. In some instances, large
consumers are being advised against switching to stand-by generators just
during the date change period, as this could in itself add instability. More
generally, an information policy to the public is of key importance since low
confidence can, as in other sectors, precipitate problems.

1 Some software is unable to recognise the year 2000 as a leap year, hence the
29 February 2000 would simply not exist. As a consequence, calculations involving
a date after 28 February 2000 would be incorrect.

6

Co-operation on
contingency planning is
taking place in the EU.

The reliability of grids
is a key issue for
nuclear power plant
operations.

The large operators are
well prepared…

…in an industry which
has substantial
experience of
contingency planning.

Sensible risk mitigation
measures are planned.

Co-operation between countries and supply companies within the major grid
systems is taking place, highlighting the need for a common understanding and
guidelines. The UCTE2 and Nordel3 grids have implemented a policy of setting
flows across links between countries within these grid systems at minimum
levels during the date change period, but keeping the links connected, so that
electricity could be supplied if required. More generally, short term electricity
exchange for economic optimisation purposes will temporarily be suspended.

The importance of maintaining grid operation for nuclear power stations has
been identified as a key issue, since if the grid fails, the plant normally shuts
down, though the reactor still requires electricity for cooling. This is a well
recognised risk counterbalanced by the availability of back-up generators and
batteries. Ensuring readiness of the latter is part of the various efforts being
made to ensure the safe operation of these plants.

3.4 Oil and Gas Production and Supply

The oil and gas industry as a whole generally consists of large operators with
comprehensive and well-defined Y2K projects, many of which are already
reporting completion of their internal preparations. In the upstream sector, the
industry has identified all the normal external dependencies, such as a reliance
on external power, water and telecommunication providers. A number of
additional specialist dependencies are relevant for offshore operators, including
helicopters, air traffic control, coastguard and support vessel operators.

In common with the other energy areas, this industry has a long and extensive
expertise in contingency planning. They therefore recognise that no matter how
much effort has been expended on carrying out a thorough checking process, it
is prudent to assume something could be missed and plan accordingly. In the
UK, the UK Oil Operators Association arranged a major seminar on behalf of
the industry where Communities of Interest were established to bring together
specific facilities/resources
to develop
compatible contingency plans and identify possibilities for mutual assistance.

from interested parties

in order

The development of plans for the rollover period for the various operators is
well advanced, and many common themes are emerging. The goal
is to
minimise the risk/impact of any failures which do occur, thus there will be a
temporary curtailment in maintenance and other non-time critical activities such
as loading and offloading, and moving vessels into/out of harbours.

The situation is similar in the downstream area. Again, non-critical activities
will be avoided, pipeline and vehicle movements will be reduced, and
companies are augmenting their distribution chain stock levels to accommodate
possible changes in customer purchasing behaviour.

In certain cases, residual work remains. In the UK for instance, to minimise
disruption to customers and resulting lost sales, some operators plan to combine
the installation of new pre-tested/certified Y2K-compliant forecourt equipment
with their steps to convert/replace 4Star leaded fuel dispensing equipment with

2 UCTE: Union for the Coordination of Transmission of Electricity: Comprises
Austria (AT), Belgium (BE), Croatia (HR), France (FR), Germany (DE), Greece
(GR),Italy (IT), Luxembourg (LU), Former Yugoslav Republic of Macedonia (MK),
The Netherlands (NL), Portugal (PT), Slovenia (SI), Spain (ES), Switzerland (CH),
and Federal Republic of Yugoslavia (YU).

3 NORDEL:

the organisation for electric power co-operation in Denmark (DK),

Finland (FI), Iceland (IC), Norway (NO) and Sweden (SE).

7

Lead Replacement Petrol equipment. This timing is largely dictated by a
taxation change which comes into force at the end of October.

Eastern affiliates may
provide useful
information.

Governments will also be able to take advantage of the international nature of
this sector, and have access to the results emerging from the various companies
Far East affiliates to obtain advanced warning of potential emerging problems.

There is a potential
impact of Y2K on
nuclear safety.

Rigorous programmes
are in place throughout
the EU, which are
closely monitored by
regulators.

4 NUCLEAR SAFETY

4.1 Overview

There are a number of potential problems in nuclear power plants (NPPs)
relating to safety that 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 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.

4.2

International Activities on Nuclear Safety

WANO, the World Association of Nuclear Operators, has taken initiatives since
1998 to raise awareness and share information amongst
its members. The
International Atomic Energy Agency (IAEA) has launched a special project to
address the Y2K problem for NPPs (particularly in CEEC, NIS and China). It
has performed a number of missions to NPP sites. These have revealed a
number of Y2K issues although these are generally not
in safety critical
they may present a risk to continued operation, and an
systems. Instead,
associated risk of operator overload. The IAEA plans to undertake further
missions but it is limited by the unavailability of Western experts. It planned to
hold an expert meeting in July, to discuss and analyse results seen to date.

4.3

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. Some Member State NPP operators reported they would be Y2K
ready by end of June 1999. Others intend to execute some remediation and test
activities during summer shutdown periods and plan to end such work by the
end of September or, in one case, October. All Member States’ NPP operators
are now preparing risk mitigation and contingency plans. A number of research
reactors will be closed over the critical dates. Several regulatory authorities plan
to conduct
including the examination of
contingency plans.

inspections during the autumn,

in regular contact with relevant

industrial groups
The Commission is
(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
to Y2K compliance of NPPs in the
Commission’s activities with respect

8

Possible sources of
concern in CEEC and
NIS.

Member States, since they report that they are already adequately addressing the
issue.

4.4 Nuclear Safety in Central and Eastern European Countries (CEEC)

and New Independent States (NIS)

Central and Eastern Countries (CEEC) and New Independent States (NIS) are
reportedly taking measures; however, it appears that the level of awareness and
action is not homogeneous.. 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, increasing the
possibility of problems with ensuring adequate reactor shutdown (cooldown) or
of overloading operators. The Commission July grid conference discussed (see
section 3.3. on Electricity) the impact of Y2K on EU, CEEC and NIS grids and
possibilities for international co-operation.

A number of supporting
programmes to nuclear
installations exist

Considering the tight
time scale and the absence of any mandate for the
European Union to take an initiative, the Commission is channelling a major
effort on supporting the IAEA4, WANO5 and ISTC6 work.

At the Commission’s request, the issue was addressed at the TACIS on-site
assistance meetings organised by WANO in November 1998 and May 1999.

the Commission requested TACIS on-site assistance
In December 1998,
contractors to ensure the Y2K compliance of equipment delivered under EU
programmes. In early 1999, the Commission initiated a new inquiry with all 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. In the framework of the EU TACIS on-site assistance
programme, the issue has already been taken up by one contractor (at Leningrad
NPP).

Following intensive discussions, the terms of reference for a specific TACIS
support project have been agreed over the reporting period between the
Commission, the IAEA and WANO. The Commission has meanwhile signed
the relevant contract with WANO. The objective of the project is to perform an
independent review of the Y2K status of designated NPPs in Russia and
Ukraine. This is done in full co-ordination with the IAEA.

The ISTC is 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. A number of project proposals
have recently been approved.

The Commission is also
encouraging the
exchange of information
between nuclear
regulators...

the senior nuclear
The Commission’s CONCERT group,
regulators of 25 EU, CEEC and NIS countries) has discussed the issue on three
occasions since June 1998 in order to increase awareness. All CEEC and NIS
nuclear regulatory authorities have action plans, several developed following
the first discussion. The content of these plans and their state of progress varies

(consisting of

4

IAEA: International Atomic Energy Agency.
5 WANO: World Association of Nuclear Operators.
6

ISTC: The International Science and Technology Centre, Moscow, RU.

9

significantly. Some countries report being as well prepared as their EU
counterparts, while others are significantly less advanced.

...and provides them
with direct assistance.

Following requests for specific assistance, the Commission is now providing
support to the Bulgarian and Slovakian nuclear regulator authorities. A request
from the Russian authority is being processed.

EU countries also carry
out bilateral activities.

International
organisations in the
aviation sector are very
active…

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.
The UK Department of Trade and Industry funded a study7, 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. Representatives from Russian
nuclear power plants have observed the Y2K preparations carried out by the
Loviisa NPP in Finland, which contains Russian-made reactors. Germany is
providing assistance to the Ukrainian regulator and NPPs. Further reports on
bilateral actions have been requested from Member States.

For all Commission funded on-site 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.

5 TRANSPORT

5.1 Aviation

5.1.1

International Activities in the Aviation Sector

The International Civil Aviation Organisation (ICAO) has developed Y2K
assessment criteria which cover three areas: - Air Traffic Services, Airports and
Aircraft Operators. Its Member States were invited to perform a critical Y2K
compliance assessment of their aeronautical services, air navigation services
and the aerodrome services of designated international and alternate aerodromes
based on these criteria, and provide appropriate aeronautical information by
1 July 1999 on the compliance status of these services. A first global readiness
assessment report based on this survey is under preparation and will be
available by mid-September.

In order to ensure that strategic ATS routes remain open, their contingency
planning efforts are focusing on providing back-up power and telecom facilities,
as well as the establishment of 8 regional contingency co-ordination centres
which will collect and disseminate information to the countries of their region.
A global co-ordination centre will also be created. IATA has created a database
with information on the status of their members.

In the European Civil Aviation Conference (ECAC), an examination was made
of the legal aspects of possible courses of action being considered in connection
with Y2K readiness, as well as limitations of operations in cases where there is
no information on compliance status, and/or where there is reason to suspect
non-compliance, with a view to preparing policy proposals to the Directors

7 The Millennium Problem. Raising the awareness of nuclear power station operators

and regulatory authorities in Central and Eastern Europe, September 1998

10

…and EU aviation
organisations are also
acting responsibly.

There are some
difficulties in obtaining
supplier information.

International testing of
ATS services is
occurring.

Identifying embedded
chip problems in ships
is an issue.

The key threat to
navigation systems can
be easily overcome.

Many EU ports will
request certification of
compliance from ships.

General of Civil Aviation. A meeting of Directors General is scheduled to take
place on 18 October 1999.

The Commission has regularly informed the Council of Transport Ministers
regarding relevant developments and has participated in the ECAC work. It will
consider the need for appropriate action in light of the assessments of the
situation made by international organisations.

5.1.2 EU Aviation

Throughout the EU, individual airport, airlines and air traffic control (ATC)
systems are preparing for the new millennium with projects expecting to be
completed during the second and third quarters of 1999. Such projects generally
cover critical links to relevant partner systems at the airports and to basic
telecommunications). Many ATC operators are
suppliers (power supply,
carrying out interoperability tests both internally and with external partners such
as the airports and Eurocontrol.

The industry reports experiencing some problems in obtaining satisfactory
assurances from suppliers. In a number of cases, the supplier chain has proved
to be more complicated and longer than anticipated. The industry is also heavily
dependent on the availability of vital national
(power,
telecommunications, and water). For power, the industry is taking steps to
ensure that alternative or backup sources are available, however, there remain
concerns about possible failures of telecommunication networks.

infrastructures

On an international basis, contingency planning is closely interwoven with the
neighbouring countries, since there is a high degree of dependency on others for
air
traffic control services. The civil airport authorities are drawing up
contingency plans for essential airport systems. Several countries reported
carrying out interface tests with neighbouring air traffic service providers.

UK Ministers have announced that the Government will be making a statement
on the international safety implications (the Y2k status of foreign operators,
airports and ATC systems) by October 1.

5.2 Maritime Transport

Ships may make use of a variety of electronic devices and systems, particularly
in the newer fleets. There is extensive use of embedded systems, for which it
may be very difficult to obtain information from suppliers. Each ship also tends
to be unique, in that even ships in a batch from the same yard will need to be
examined individually, taking into account their history of repairs and upgrades
following delivery.

The main risk to any ship is in the ability to navigate safely. In general, the
shipping sector has assessed their Y2K compliance and developed a
replacement and contingency programme to overcome the potential problems
identified. However, all ships have a built-in contingency to cope with the
failure of electronic equipment relating to navigation - reversion to manual
methods.

All Dutch ships will be licensed by a joint effort between insurance companies
and a sectoral organisation. For ships from foreign countries visiting Dutch
ports, a similar scheme is proposed. Greece is also paying close attention to the
maritime sector. Proof will be requested from ships entering Greek ports that
measures have been taken to address the problem. They will also be required to
provide documented Y2K contingency plans.

11

Risks to port operations
are being addressed.

The UK will carry out
independent
assessments of port
readiness.

In Germany, navigation
systems are being
carefully tested…

…and port contingency
plans will be reviewed
by the national
authority.

Ports are hubs of trade activities, and this is reflected in their processes and
main dependencies, which range from the supply of electric power through to
provision of customs and immigration and the supply of tug services. The main
risks to port operations appear to be the failure of electricity supply, loss of
communications, hazards created by non-compliant shipping, and disruptions to
the national transport infrastructure.

Ports already practice and operate contingency planning for all areas of their
operations. For Y2K, ports are identifying potential problems and carrying out
work to minimise or remove the risk to port operations. Some ports may close
for a time over the critical period or place additional safety precautions on
shipping entering the port. Notice to mariners of these restrictions will be given
in the usual way.

In the UK, the 50 largest ports have been asked to provide information on their
state of readiness by means of a detailed questionnaire. The survey consisted of
two parts - an assessment of the ports overall Year 2000 programme, and a
rating of the risk to specific areas of port operation. Consultants have been
appointed to conduct an independent validation of the self assessments of nearly
half of the largest 50 UK ports, including all the top ten by freight volumes,
with results expected to be published in July.

In the field of inland navigation in Germany, the national traffic management
and control systems are being examined by the navigation test centre in
Koblenz, which is responsible for the central management of maritime traffic
control systems. These trials, which have been running since 1997, cover the
local switching,
radar, navigation and direction finding computer systems,
remote control,
satellite navigation
information and recording systems,
equipment, and the reporting and information system for inland navigation.

Y2K problems in the German maritime navigation and seaport sector were also
discussed at a meeting of harbour masters with the BMVBW, the North and
North West Waterways and Shipping Directorates and the BSH in January 1999
in Bremen. With regard to German maritime navigation and seaports,
the
waterways, shipping offices and the ports falling within their jurisdiction will
draw up contingency plans by the middle of the year to be discussed at a
meeting of all port authorities with the national authority. These plans will
cover all the agencies involved, such as river police, fire service, pilots, tugboat
the German Lifeboat Association and other voluntary
owners, watermen,
organisations.

The Netherlands have
introduced a
certification scheme for
ships.

In the Netherlands, port authorities and individual shipping companies are
considered to be making good progress, although this applies to larger firms
more than smaller firms. A certification scheme for ships has been developed
and is being implemented; thus a certificate will be required to obtain entry to
major ports.

Several governments mentioned that they would like to see more information on
progress provided by this sector, and also felt that there was a need for greater
co-ordination at international level.

5.3 Rail Transport

Rail industry Y2K projects focus on central and remote business and technical
systems, embedded systems, and supplier and customer relations.

Rail operators report
that supplier claims are
not always accurate.

Many rail operators are dependent on external suppliers. In Germany, for
example, the results of a survey of suppliers carried out in 1997 did not reveal
any particular problems with the process computers used in the Deutsche Bahn

12

Road transport systems
are being examined.

The EU
telecommunication
industry is making good
progress…

…and are not expected
to be disrupted by any
international problems.

Contingency plans
make use of existing
emergency procedures.

Information campaigns
are being aimed at
corporate and private
consumers.

AG network. However, actual tests carried out by DB placed considerable doubt
on the claims of some suppliers.

5.4 Road Transport

In most instances, road systems are the responsibility of local authorities, thus
few EU countries are addressing this sector at national level. Countries report
that local authorities are examining their operating equipment and the traffic
and electrical devices controlled by computer programmes. Included are traffic
light systems (controlled by programmes which make use of the calendar), data
acquisition units such as permanent census points and measuring loops with
stops at
intervals, equipment affecting traffic flows on motorways and
highways, traffic computer centres, and other operating equipment, such as
tunnel installations, communications equipment, and lighting systems.

In Germany, the road building authorities in the Federal Länder are currently
drawing up contingency plans, and the police services of the Länder are now co-
ordinating their action plans for the turn of the year with those bodies
responsible for road transport.

In the private sector, attention is being focused on transport logistics chains, due
to their importance for trade and the economy. The road sector is regarded as a
low risk sector, where the problems which have been identified tend to affect
less critical systems.

6 TELECOMMUNICATIONS

As one of the key infrastructure sectors upon which all others depend, the
telecommunications industry is carefully preparing for the millennium date
the Public Switched Telephone
change. Several EU countries report
Network facilities provided by their main operators are already compliant, with
most expecting to be ready by September 1999. The overall risk of disruption
from the main network providers of direct fixed and mobile telecommunications
is considered to be low.

that

Although certain countries are better prepared than others, international calls to
some less developed countries may be disrupted, as the networks in these
countries may not be adequately prepared. International telecommunications
failures are not expected to have an impact on domestic services. EU operators
are working to ensure that their end of international links are Y2K compliant.

The industry is focusing on business continuity contingency planning. In certain
the independent verification of network operators’ contingency
countries,
arrangements is part of this process. All countries report
that their major
operators have performed risk assessment and business impact evaluations.
Operators in this industry have pre-existing emergency plans, which include the
use of mobile centres, backup generators, activation of mobile satellite systems,
manual operations, mobilisation of additional human resources.

There is concern about the equipment which businesses and individuals use,
although most customers will not be affected. Campaigns are being carried out
by operators and governments to raise customer awareness of possible effects
on their equipment. Information leaflets are aimed at the home consumer,
identifying all equipment
including
telephone equipment, as well as at companies. Some telecom operators have
information packs available both to corporate and private users of their
equipment. The larger operators are setting up dedicated Y2K help lines, and

in a home which might be affected,

13

Operators have agreed
procedures to prioritise
emergency calls.

smaller operators are providing information and advice via their usual customer
services lines, as are certain regulatory authorities such as OFTEL in the UK.

Most consumer equipment such as telephones and fax machines will continue to
work as normal. People using non-compliant PCs to access networks may
encounter problems, as could small businesses using private switches which
have date-dependent functions.

Large national operators have internal procedures to prioritise telephone calls in
emergencies, with a dedicated emergency planning staff. Detailed plans are
being developed for emergency telephone number services to handle an
anticipated increase in the level of emergency calling. For example, BT in the
UK is planning to handle up to five times the normal level of Saturday night
999 calls - a significant margin above the level of 999 calls for last New Year’s
Eve. In the Netherlands, an emergency telecom service is available at national
level for government users, which is being carefully tested. The introduction of
a temporary, mobile phone, emergency service is being considered to augment
the current capacity of the emergency service.

Some countries have recognised a need for “behaviour management” of
telecommunication customers, to reduce potential call congestion overload due
to normal end of year activities. Hence in the Netherlands, a dial-in television
programme originally planned for New Year’s Eve was cancelled.

7 FINANCE

7.1 Overview

The financial sector
considered most
advanced.

The financial sector is still generally considered to be the most advanced sector,
although it is fully recognised that financial services, like other sectors, are
dependent on other infrastructures such as electricity and telecommunications.

7.2

International Activities in the Financial Sector

International co-
ordination activities.

At international level, two organisations, Global 2000 for industry and the Joint
Year 2000 Council for the supervisory authorities, have carried out specific
Y2K activities, as well as the development of a mechanism for the global
exchange of information during the rest of 1999 and the rollover weekend.

insurance,

Global 2000, the international organisation created by the financial services
(FS) industry (banking,
investment firms and payment systems
operators), updates a global country readiness chart every 3 weeks. This chart
indicates their assessment of the readiness of countries in various critical
sectors:
and
government. Global 2000 plans to cease these assessments in September to
concentrate on event management and risk mitigation for the remainder of the
year.

telecommunications,

energy, water,

transport,

finance,

-

The Joint Y2K Council has prepared instruments to facilitate the exchange of
information between supervisors and central banks during the rollover period:

•

•

a status report template to be completed by each institution and sent to its
supervisor, which could be used to inform other interested parties;

a country report template for each national supervisory authority to inform
other national supervisors of the level of readiness of their country;

14

•

the organisation of conference calls between national supervisors and
certain other parties to rationalise communication during the rollover
period.

The level of information disseminated by the country reports and through the
conference calls will be very general. The exchange of more confidential and
sensitive information will be left to the traditional bilateral contacts between
supervisors. Major EU financial centres and national supervisors will be part of
the Joint Year 2000 Council exercise for the rollover period, and the European
Commission and the European Central Bank may also be associated.

7.3

EU Financial Services

The financial services sector in the EU, as in other countries, has given top
priority to contingency planning and risk mitigation.

Most of the internal adaptation of systems is now complete and testing has been
greatly advanced. A successful
test of payment systems was
international
conducted during the weekend of the 12-13 of June. The participants (19
countries including 5 EU countries - Belgium, France, Germany, Italy, and the
United Kingdom - as well as EBA, TARGET, and SWIFT) established an
environment for 34 participating systems to test “end-to-end” transaction flows.
This test involved “Y2K ready” systems and used highly scripted transaction
sets with customers and correspondents, investigation systems, repair systems,
treasury management systems, and credit and risk systems.

In the other financial sub-sectors, multilateral testing has occurred both on a
compulsory and voluntary basis. It is expected that the testing phase will be
completed by the end of September for the vast majority of businesses.

Contingency planning is taking place on an individual and collective basis,
linkages between partners.
determined by the technical and commercial
Nevertheless, system testing leads to constant new adaptations to systems,
hence, work on contingency planning is occurring in parallel.

Many EU operators in this sector are assessing the Y2K readiness of their
counterparts and customers. This enables them to take preventive measures to
limit the impact of less prepared operators, and increase the pressure on partners
and customers to address the problem. The majority of EU businesses in this
sector regularly disclose general and technical information on their internal state
of Y2K readiness. In parallel, professional organisations at the EU level provide
an insight into readiness of their sector at country level.

In carrying out their risk analyses, the financial services sector has tended to
focus on the rollover period. Although operators are aware of potential macro-
economic Y2K-related risks, there is still a tendency in the EU to underestimate
management and business risks not directly associated with information system
failures (business-to-business risks, systemic disruptions, coverage of clients
Y2K risks and litigation).

7.3.1 Banking: Lessons provided by the changeover to the euro

Although the Y2K projects of financial service businesses in some cases may
have suffered in 1998 due to the priority given to the euro, banks have been able
to take advantage of their acquired euro experience and expertise and apply it to
the Y2K problem. Whilst the euro conversion is not completely comparable to
the changeover to the Year 2000, nevertheless, there are certain similarities
from a technical and project management perspective.

15

Successful testing of
global payment systems
was conducted.

Financial service
operators are carefully
assessing external
threats.

The euro changeover
has generally been an
advantage for the
financial sector.

There is a need for the
suppliers of liquidity
and credit to offset
payment and funding
dislocation…

…as well as an
improved system for the
collective exchange of
information.

Priority is being given
to event management,
risk mitigation and
contingency planning.

The banking community in the EU and of Global 2000 have therefore used the
changeover to the euro, particularly the rollover period of the weekend of 1st
January 1999 (including the five days after the 1st of January), as a template for
the Year 2000 changeover. Global 2000 has issued various recommendations
aimed at the banking community8.

The Global 2000 document states that “…firms and central banks were faced
early on with funding and credit decisions that had to be made with less than
perfect information”, and recommends that a responsible body should deal with
such matters in the future. Work on Central banks and firms liquidity
management has raised a number of issues: on one hand, companies will wish to
ensure business as usual, however, credit
institutions will be tempted (or
obliged) to restrict their lending capacity. Collateral could pose a problem as
well if every financial institution requests collateralisation of all transactions
and positions. Global 2000 believes that there is a limit to what the private
sector can do and has asked public authorities to share in the monitoring of the
Y2K-related impact on financial markets.

The core problem is the location in which collateral is accepted. In Europe, the
problem arises from substantial differences in the national laws governing
collateral operations. However, payment systems in the EU are based on several
infrastructures (Euro 1, EBA, Target), which reduces the risk of systemic
problems occurring in the field of payment systems.

The Global 2000 document highlighted “the lack of information across firms
and industry systems as a significant problem, especially on cross-border issues
during the first week after the conversion”, indicating that “Formal information-
sharing networks that had been set up in advance were not used as expected,
because firms were generally not willing to volunteer or share bad news until
the last minute”. Apparently, “The most effective information sharing and
problem solving occurred through telephone contact bilaterally”.

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. The EU banking community is now concentrating on the
management of the rollover period, and is at the core of the efforts being made
at national and international level to secure a stable financial environment
throughout the rollover weekend.

Nationally, EU banks will be in constant contact with their supervisors and with
the national Central Bank. At international level, a cross-border mechanism
monitored by Global 2000 will ensure coherent country information and secure
channels to disseminate this information (secure telecommunication providers
for collective teleconferences, SWIFT, Reuters and the Internet). Global 2000
will set up protocols to identify appropriate contact points in every institution
for bilateral or multilateral communication purposes. Such cross-border
channels for communication between firms are very new and unique for the
sector.

Extra testing may take
place during the
rollover period.

The banking community recognises the inevitability of some disruptions arising
from Year 2000 computer problems, particularly from residual bugs which may
not have been identified during testing exercises, however thorough these may
be. Many banks are therefore considering the possibility of organising “real

8 Lessons Learned from the Euro, Global 2000 Co-ordinating Group, 4 February 1999

16

tests” during the first weekend of January (an option which is not available to
the payment systems industry).

Additional bank
holidays.

The European System of Central Banks has decided that the 31 of December
1999 should be declared a bank holiday to allow central and commercial banks
to have three full days for their final Y2K preparations. The ECB has also
decided to close the TARGET system on this day.

Payment systems must
be ready on time…

…although there is a
complex chain of
dependencies which
contributes to the
overall readiness.

Card operators are
assessing their members
for compliance.

The majority of SWIFT
users have carried out
testing.

7.3.2

Payment systems: Business as usual during the rollover period

Unlike other financial services, payment systems will need to be up and running
from the very first moment of the new Millennium. Without the “period of
grace” that the other industries have, payment systems will not be permitted to
close or reduce their operations, nor to test their systems in the post-Y2K
environment during the three holidays of 31.12.1999, 1.01.2000 and 2.01.2000.

The payment systems industry has therefore been carrying out assessments,
testing and contingency planning for some time. A VISA survey in May 1999
indicated that more than 90 % of the VISA transaction traffic in dollar fall will
not be affected by the changeover to the Year 2000. Only 10 % of their member
institutions are in countries which are considered to be less prepared.

Nevertheless, the Y2K “compliance” of payment systems as a whole does not
rely only on the readiness of payment systems operators (generally Y2K ready
as far as their internal systems are concerned). It depends also on the financial
infrastructure readiness (Y2K ready), bank readiness (the direct customers of
payment systems operators) and merchant readiness (and the suppliers of the
point of sale terminals for payments, merchants are bank customers for retail
payment systems), as well as providers of telecommunications and electricity.
Payment systems operators such as VISA and Europay therefore evaluate the
readiness of their members on the basis of their individual preparedness as well
as the overall readiness of the country.

Moreover, major operators in the credit card industry have established
agreements to implement a network of observers for
the exchange and
monitoring of information (30 people throughout Europe). Most EU card
operators are basing their contingency plans on a possible 5 days outage of
electricity and telecommunications, which would affect 5 to 10 % of the
financial transactions based in Europe (1 % in the US), whilst recognising that
the actual situation will vary considerably from one country to another.

Card operators rely on various sources of Y2K information, as well as on
to
specific assessment questionnaires sent
complete their
readiness evaluations by September, such that preventive
measures, including penalties or the withdrawal of licenses, could be taken in
the autumn. The operators have completed the remediation of their own systems
and contingency plans. Their main focus is now on “event management” or the
“rollover period” - management of the 5 days around the 1st of January 2000.

to their members. Most expect

7.3.3 Wholesale payment systems and infrastructure providers

Mandatory testing is the guiding principle for SWIFT customers. The coverage
of mandatory testing is not universal: 5100 customers have connected their
systems for these mandatory tests, representing only 70 % of their total
customer base, but approximately 94 % of
the live traffic for SWIFT
transactions.

17

Securities firms are
adopting practical
measures to reduce
risks.

Insurers are examining
the potential impact of
Y2K…

…and preparing for a
significant increase in
claims.

There is no consistent
approach in the EU –

…some countries will
cover Y2K and others
won’t.

The remaining financial institutions are not obliged to participate in testing of
wholesale payment systems. Nevertheless, SWIFT has created a dedicated
infrastructure to assist
to carry out voluntary testing.
Participation in voluntary testing is substantial, although less than in mandatory
testing, thus an effort is required from those who have yet to take part in
bilateral and multilateral testing. Testing should be completed by September.

those who want

7.3.4

Securities : a flexible approach for the exchange of information

As far as dealing conventions are concerned, Global 2000 envisages that
operators will change certain standard documents used for deals. They suggest
that activity in this field be reduced to essential processing and settlement
activities during the rollover weekend wherever possible and practical, such that
this reduction in activity does not hamper normal market operations or affect
market liquidity.

7.3.5

Insurance: A wider assessment of Y2K-related risks

Insurers have analysed very closely the impact of the Year 2000 changeover on
their customers, primarily businesses, and the additional financial burden that
could be expected through an increase in sinisters. The changeover to the Year
2000 is expected to have macro-economic consequences resulting from
disruption to business or because disruptions will lead to financial losses that
businesses will try to recuperate by suing their partners and providers.

This impact is likely to occur in three waves, the first of which will happen
during 2000 itself. Initially, recourse will be made to damage insurance policies
and second level suits in liability. Property losses will result in an increase in
claims, the victims of which will turn to their insurance companies in order to
obtain coverage under their normal damage insurance policies.

French insurers alone expect up to 70,000 additional claims. They have made it
clear to their customers that they will be required to prove that they have taken
all necessary measures to protect themselves against Y2K-related risks (the so-
called “due diligence” principle). In this context, French insurers have put in
place a common technical platform that will provide each damage insurance
company with the expertise needed to identify specific Y2K-related sinisters
and the technical reasons why a sinister was wholly or partially caused by a
Y2K problem, and to analyse the quality of the Y2K project of the insured
company.

Additionally, the first wave of liability claims will be launched throughout
2000. A second and third wave of Y2K legal consequences will take place in
2001 and 2002 – when liability cases generate appeals and counterattacks.
Serial claims are also likely to generate specific actions during 2001 and 2002.

The UK insurance industry is also concerned that it may face claims as a result
of Y2K failures, in spite of its efforts to inform customers that it will not cover
such a predictable event. The UK insurance industry commissioned a report
through the UK trade body, ABI, which produced a series of model clauses to
insert in policies, in order to help insurers clarify their exposure to the problem.
Nevertheless, there may be a difference between the advice which companies
are currently giving to their customers and the eventual resolution of claims.

In the Netherlands, millennium risks are being excluded from most policies at
renewal. A central emergency fund of 500 million euro has been established for
intended for policy holders who can prove due diligence in
special risks,
addressing the problem. Italian insurance companies are also introducing new
contracts with special clauses excluding year 2000 risks, particularly in areas

18

The risk of increased
litigation due to Y2K is
a serious concern in the
EU.

BAC supervisors
continue to monitor EU
preparations…

…and insurance
supervisors are aware
of the different
approaches being taken
in each MS.

such as general civil liability (for professional activity and product policies),
damage to other goods, transport, and fire.

There is some uncertainty regarding the legal environment in the EU and
elsewhere, and the potential impact of the Year 2000 cannot be accurately
assessed. The risk of increased litigation cases due to the Year 2000 changeover
in the EU is thus a serious consideration for many insurers. The liability for
disruptions and serious claims is likely to be found outside normal insurance
contracts. In certain cases, where businesses are in a position to demonstrate
that they have taken all necessary measures to protect themselves internally
against Y2K-related disruptions or malfunctioning,
then disruptions and
malfunctioning which cause serious damage will be covered by the insurance
company. Nevertheless, the better-prepared businesses, and their insurers, will
search for external entities to sue.

The cost of this litigation chain has been estimated as hundreds of billions of
dollars world-wide. Should a limited number of operators (particularly chip,
software, and hardware providers) be identified as the source of the liability
chain, this could lead to a situation where these few companies end up bearing
the cost of a collective financial loss, with their liability only partially covered
by their insurance contracts. This is clearly an unacceptable position, which
could temporarily weaken economies.

7.4 Commission Activities in the Financial Services Sector

EU supervisors meet regularly in the Committees organised by the European
Commission to discuss the Year 2000 issues.

For banking, the Banking Advisory Committee (BAC) met several times during
1999 and will meet again in September. Although it concluded in March 1998
that
the Year 2000 issue fell primarily under the competence of national
supervisory authorities, the BAC decided to contribute to raising awareness on
the issue and to facilitate co-operation between national supervisors.

In each BAC meeting, EU supervisors consider the Y2K preparedness of the
banking sector. The Groupe de Contact is the relevant body for supervisors to
deal with the issue. The BAC receives information from the Groupe on a regular
basis. For example, in March, the BAC discussed a situation report on practical
measures and issues faced by supervisors concerning the Y2K changeover. The
Groupe de Contact is also in charge of establishing a contact list of Year 2000
experts to assist supervisors and to strengthen supervisory co-operation in cases
of emergency.

EU supervisors are generally content with the level of preparedness displayed
by the banks. Their main concerns are the readiness of counterparts, such as the
public sector and utilities, and contingency plans. The level of co-ordination
that is taking place between EU competent authorities is considered satisfactory.

Committee meetings have also taken place in the insurance sector, with the next
meeting in September. During a meeting in April, Insurance Committee (IC)
discussions have highlighted the different approaches pursued in each country.

In France, an organisation has been created by French damage insurers,
“Coordination An 2000”. Insurers are disseminating general information to their
business customers to draw their attention to the risks associated with both
internal systems and the potential for increased costs arising from litigation.
Recent cases in France have suggested that case law is now more favourable to
consumers than to insurers. The French government adopted a regulation
imposing a new obligation on financial service operators to inform their Board
throughout 1999 on their level of Y2K preparedness. In parallel, budget law has

19

given an advantage to insurance companies in France, allowing them to
provision for the potential increased future risks of sinisters.

All companies in the German insurance industry have replied to a questionnaire
issued in 1998. This questionnaire has stimulated further efforts by insurance
companies to prepare for Year 2000-related risks. German insurance companies
have not introduced Y2K-exclusion clauses in their contracts.

The supervisory authority of the Swedish insurance industry delivers a detailed
report to government every six months on the Y2K readiness of the sector.
Supervisory authorities are also responsible for site visits and have visited
nearly half of the insurance companies in Sweden. The Austrian national
authorities are particularly concerned about liability in the event of hospital
accidents relating to Y2K. In Italy, the insurance sector is a priority of the
National Committee for the Year 2000, where an ad hoc sub-Committee meets
monthly to analyse the progress of the sector.

8 WATER

The water sector is also
developing contingency
plans…

…but it remains difficult
to obtain information.

In general, the production and distribution of water can be handled manually
without the support of IT-based control systems. Contingency planning in the
water industry is similar to other infrastructure sectors. Reservoirs will be full.
There will be increased staffing and additional training provided to personnel to
carry out manual operations if necessary. Emergency power supplies will be
used as a back-up in the event of a loss of energy supply. In Greece, there are
plans to have personnel equipped with various telecommunication equipment,
located at critical nodes of the water supply network and prepared to take quick
and effective action.

Several countries reported that water supply and waste water management was
one of the most difficult sectors from which to obtain information, although
they also felt that it was a sector which was exposed to some risk. This
localised
difficulty is primarily associated with the large number of small,
companies which provide these services, usually thousands in each country.

9 COMMISSION ACTIVITIES

9.1

Internal Situation

Commission initiatives
continue...

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

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

...and good progress
has been achieved.

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

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. Approximately 67% of
the Commission’s strategically important
information systems are already
compliant or are being replaced by compliant systems, 32% are currently being
adapted and, for the remaining 1%, investigations are ongoing.

20

End-to-end testing has
been conducted...

...and non-IT aspects
are being addressed.

A successful workshop
explored cross-border
and cross-sector issues
in critical infrastructure
sectors in the EU.

the underlying infrastructure (hardware, system software,

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
third party
software) is well advanced and compliance will be achieved in time. A series of
individual tests in the DGs and a Commission-wide end-to-end test have been
conducted. The end-to-end test has validated the compliance of information
flows in the areas of administrative, financial, statistical, documentary and
office information. The results of this test showed no major outstanding
problems. Further tests are planned for information systems which link to
national administrations in the areas of customs and agriculture.

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, a legal audit
of products, contracts and obligations,
infrastructure aspects
(including buildings, security systems,
lifts, and all related supplies), and
information campaigns targeted at Commission staff and the public.

the general

As regards other European institutions, the inter-institutional committee for
informatics (CII) is co-ordinating year 2000 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.

9.2

External Activities

On April 19-20 the Commission hosted a meeting with the providers of EU
critical infrastructures in Brussels, with an emphasis on cross-border and cross-
sector Y2K issues. Over 150 participants, including national Y2K co-ordinators,
regulators, and representatives of both international associations and industry,
shared information on their progress and concerns relating to the aviation,
maritime, electricity, gas, telecommunications, and nuclear power sectors.

All participants expressed their commitment to ensure “business as usual”
during the millennium changeover period. Industry associations are:

•

•

•

providing their members with guidelines and databases of common
information,

offering fora to exchange information between members,

developing strategies for, and implementing, sectoral contingency plans.

The need to encourage better
communication between the different
infrastructure sectors at local, national and international level was identified as
a major issue. Such intersectoral co-ordination must cover aspects such as:

•

forecasting customer behaviour and sectoral demand,

• making joint information on progress and plans available to the public,
•

reaching agreement on priorities and contingency actions in the event of
unexpected disruption to essential services.

A need for increased
communication and
exchange of information
was identified.

Regulatory authorities and other organisations must soon take very difficult
decisions concerning whether to continue to license or certify individual
companies to continue to operate. Hence there is also a need for increased co-
operation, to share strategies, and the criteria and information upon which they
will base such decisions.

21

A follow-up event is
planned in the autumn.

MS civil protection
authorities are also
exchanging plans.

Potential problem areas
have been identified.

No crisis scenarios are
envisaged, but Y2K
could exacerbate
normal holiday
emergencies.

Several sectors rely upon the continuity of service or supply from countries
outside the Union. The session on nuclear safety had a specific focus on
potential safety problems occurring in the Central and Eastern European
countries and the Newly Independent States. More attention must be paid to
establishing closer communication, and where appropriate, providing assistance.

A follow-up event will take place in September, to examine the evolution of the
preparations for the rollover to the new millennium of the key EU infrastructure
sectors discussed previously. It will also investigate in more detail other key
sectors which are also relevant - rail transport, finance, and supply chains
(particularly food and pharmaceuticals, freight, and including customs issues).
Finally, it will analyse two issues which will require increasing attention as the
year-end approaches – the communication of information to the public and
emergency planning.

As previously, the discussion will focus on cross-border issues, the scope of
which will include neighbouring non-EU countries, as well as cross-sector
dependencies. The workshop will consider how to better co-ordinate activities
in these areas, how to co-operate efficiently to mitigate risks, and how to
improve communicate internationally and between sectors during the rollover
period.

A Y2K workshop involving the Member State authorities responsible for civil
protection took place at the beginning of June. The Millennium celebrations at
the end of 1999 are expected to be more numerous and larger than usual,
therefore, the fire and rescue brigades and emergency services are expected to
be in much greater demand, if not overloaded, and preparations must take this
into account. For instance, in some cities, the fire brigades are planning for a
significant increase in the number of fires, possibly twice as many as a normal
year end. All levels of responsibility from local municipalities up to central
government are involved in ensuring the continuous and safe functioning of the
economy. The system is based on the various contingency plans which are
already in place to cope with different hazards, these plans being reviewed in
order to take into account possible additional complications resulting from
Y2K.

A major concern is the Y2K compliance of the IT systems which manage
incoming and outgoing alarm calls. Nevertheless, it is considered that most
that certain links between
technical systems will continue to operate, but
systems could be disrupted. Furthermore, the behaviour of many interfaces is
unknown and cannot be tested. The possible failure of heating systems could
have the greatest
impact on the population and the availability of rescue
personnel. Telecommunications is another problem area, hence auxiliary
networks are being established, supplementary tests are being carried out, and
more personnel are being made available. Possible problems with chemical and
nuclear plants, as well as false alarms were also mentioned as issues.

Generally, emergency planners are being told not to envision a “doomsday
scenario”, but that there is a need to test, adapt and refine plans to take care of
unexpected failures, which could have a domino effect. In the Netherlands, a
special commission has been set up at government level to co-ordinate the
efforts of the emergency services at local and national level. To make these
plans more consistent amongst the various authorities concerned, a reference
scenario for emergency services and local authorities has been published.
It is
based on a worst case situation, which is defined as the lack of electrical power
supply for a maximum of 8 hours, starting at midnight on New Year’s Eve.
Local contingency plans will be activated first and various levels of escalation

22

are foreseen.
communication between the different ministries involved is efficient.

In this respect, one of

the difficulties is to ensure that

A High-Level Working
Party on Y2K issues is
established for the EU.

Efforts will be made to inform the public at all levels. The media will be used in
the event of any emergency.

the European Council

In June,
in Cologne called on the Commission to
“…convene a high-level working party which can put forward proposals for
strategic decisions which may be required within the European Union to ensure
the proper functioning of essential areas of infrastructure should computer
problems arise in connection with the change of millennium.” A first meeting of
the EU High-Level Working Party on Y2K was held in July, generally
consisting of the EU national Y2K co-ordinators, and the group will closely
monitor the situation by meeting at least monthly during the remainder of 1999.

23

10 CONCLUSIONS

Some operators are
ready and detailed
plans are now becoming
available.

Little time remains for
SMEs to take action.

As 1999 progresses,
problem continue to evolve at a rapid pace.

the situation and concerns relating to the Year 2000

A few organisations are now beginning to report the completion of their Y2K
preparations, although these tend to be the larger firms. Nevertheless,
the
to complete their preparations until
majority of companies do not expect
September or October, and some even later. The details of contingency plans
have now been firmed up, stimulating co-ordinated activities on contingency
planning throughout the EU in most critical sectors. Reference continues to be
made to dependencies on external suppliers providing timely software or
hardware upgrades. Many companies report
their assumption of Y2K
readiness is based solely on supplier guarantees, although specific reference has
been made in several country reports to supplier claims proving to be unreliable
when tested, particularly in the transport sector.

that

The position of SMEs is becoming increasingly critical, with every country
reporting that SMEs have a tendency to lag behind, indicative of a worrying
“wait and see” attitude. In certain cases, SMEs may be responsible for providing
infrastructure services, although usually on a very restricted, local basis.

it

is important

Nevertheless,
to avoid generalisations at either sectoral or
European level. A recent Italian survey noted that in the tourism sector, 90% of
companies were aware of the problem, rising to 100% for tour operators,
regardless of company size, which they attributed to the international nature of
the sector. In Italy, only 30% of SMEs actually own computers, whereas in
Finland, only 10% of SMEs do not make use of computers.

Focus on plans for the
rollover period.

Co-ordinated activities
on Early Warning
systems.

The provision of
information is likely to
become the key concern
for the remainder of this
year.

Whereas during the first quarter of 1999, attention was focused on general
contingency planning, now specific plans are being developed to manage the
rollover period itself, which includes the 1st of January but also the first few
working days of the New Year. Indeed, many organisations expect their greatest
stress to occur on the first working day of 2000.

Many early warning systems are being established - within sectors, nationally,
and between governments. Given the experience of the financial sector during
the euro implementation, where formal information-sharing networks were not
used as anticipated, it is important to carry out test runs in advance. Whilst such
systems have clear benefits, they need to be carefully designed in order to
provide the right information to the right people in a timely manner.

Many organisations are creating “command centres” or “crisis cells”. Additional
personnel are being mobilised, and it would appear that few IT employees can
expect to be celebrating at home during the New Year holiday period. As
organisations and sectors now complete their own preparations, more expertise
is becoming available to assist those who are lagging behind.

The worst sectors for the provision of information continue to be the water and
maritime sectors. This can be attributed to the large number of small operators
in these sectors, the presence of many regulatory bodies with authority over
different aspects of the industry, and the absence of supranational bodies with a
strong co-ordinating role for Y2K. Nevertheless, the supply of information to
the public by all sectors should be improved. Many companies continue to
underestimate the effect that a lack of information may have on the public, but
also the global impact on economies, in sectors where public confidence is most

24

vital. A lack of attention to communication risks damaging the position of
companies and sectors, regardless of progress in addressing the problem.

The provision of information will become increasingly important in the autumn.
In the absence of information, there is a tendency for a vacuum to be filled with
misleading, inaccurate rumours and suppositions, to the detriment of all.

25

11 ANNEX

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

These websites are not under the control of the services of the European
Commission and the Commission is not responsible for the material contained
therein.

National and government information:

Austria

Belgium

Denmark

Finland:

http://www.wifi.at/tub/2000/ (WIFI / Beratungsdienste)

http://y2000.fgov.be/ (national site)

http://www.fsk.dk/fsk/div/aar-2000/year2000.html (Research
and Information Technology)

http://www.vn.fi/vm/kehittaminen/tietohallinto/hko33.htm
(Finance)

France

http://www.premier.ministre.gouv.fr (Prime Minister)

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

http://www.industrie.gouv.fr/site/industrie/home/navi/page/indu
strie (industry)

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

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

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 (foreign
affairs)

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)

Germany

http://www.iid.de/jahr2000/

http://www.kbst.bund.de/j2k/ (Koordinierungs- und
Beratungsstelle der Bundesregierung für Informationstechnik in
der Bundesverwaltung - KBSt)

http://bmwi.gmd.de/y2k/ (The Y2K Problem in Information
Technology - Progress Report by the Federal Government)

Greece

http://www.year2000.gr

26

Iceland

Ireland

http://2000.stjr.is/ensk/index.html (national site)

http://www.irlgov.ie/ (government)

http://www.irlgov.ie/finance/y2k2.htm (Finance)

http://www.2000aware.ie/ (industry)

Italy

http://www.comitatoanno2000.it/ (presidency)

Luxembourg http://www.crpht.lu/an2000

Netherlands

http://www.mp2000.nl/ (national site)

http://www.pmo.nl/pmo/home.nsf (Ministry of Interior: SME
site)

Norway

http://www.aksjon2000.org/ (national site)

http://odin.dep.no/aad/publ/aar2000/index.html (Arbeids –og
administrasjons-departemented – AAD)

Portugal

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

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

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

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

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

Spain

Sweden

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

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

http://www.2000-delegationen.gov.se/aktuellt/index_1.html
(national site)

Switzerland

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

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

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)

http://www.citu.gov.uk/y2000.htm (Year 2000 Team & Year
2000 Media Co-ordination unit)

For the energy sector:

Finland

http://www.finergy.fi

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)

Greece

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

27

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

http://www.dep.gr

Italy

http://www.enel.it

Luxembourg

http://www.cegedel.lu

Netherlands

http://www.energie2000.nl

http://www.emp.nl

Norway

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

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

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

Spain

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

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

http://www.miner.es

Sweden

http://el2000.com/index.html

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

Switzerland

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

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

For the transport sector in general

Spain

http://www.mfom.es

For the aviation sector:

International

http://www.icao.int/y2k/ (International Civil Aviation
Organisation – ICAO)

Belgium

Finland

Greece

Sweden

http://www.sabena.com/public/about/y2k.asp

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

http://www.olympic-airways.gr

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

Norway

http://www.yen.gr

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

28

Sweden

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

For the rail sector:

Finland

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

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

France

http:// www.sncf.fr

Greece

Sweden

http://www.ratp.fr

http://www.ose.gr

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)

For the telecommunication sector:

International

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

Belgium

http://www.belgacom.be/uk/about/operations/y2k/default.htm
(Telecommunication operator)

http://www.mobistar.be/fr/new/Y2K.html (mobile telephony
operator)

Finland

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

France

Greece

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

http://www.france.telecom.fr

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

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

http://www.panafon.gr/en

Luxembourg http://www.y2k.lu

Norway

Spain

Sweden

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

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

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

Switzerland

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

UK

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

29

For the Nuclear Power sector:

International

http://www.iaea.org/worldatom/program/y2k/ (International
Atomic Energy Agency)

Finland

France

Sweden

http://www.stuk.fi

http://www.edf.fr/html/fr/an_2000/index.html

http://www.ski.se/

Switzerland

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

UK

http://www.snl.co.uk/be98/frame.pl5?loc=media/mn_factfiles_
millenium.html (British Energy)

For the financial sector:

International

http://www.bis.org/ongoing/index.htm (Bank for International
Settlements)

http://www.worldbank.org/y2k/

Belgium

http://www.nbb.be/sg/e/geninfo/p25e.htm (national bank)

http://www.gbank.com/y2k.htm

http://www.kbc.be/kbc2000/en/index_en.html

Finland

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

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

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

France

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

http://www.paribas.com

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)

Greece

Italy

http://www.hba.gr

http://www.bancaditalia.it

http://www.cipa.it

http://techinfo.sia.it

http://www.consob.it

http://www.borsaitalia.it

http://www.cedborsa.it

30

http://www.isvap.it

Netherlands

http://www.dnb.nl

Norway

Portugal

Spain

http://www.finans.dep.no

http://interbolsa.pt/index.htm

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

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

Sweden

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

Switzerland

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

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”)

For the water sector:

Denmark

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

Finland

France

Norway

Spain

Sweden

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

http://www.vvy.fi

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

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

http:// www.bouygues.fr

http://www.norvar.no

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

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

________________________

31