Legal and managerial implications of the Y2K problem:the case of banks in Kenya

Abstract

The primary objective of this study was to identify the legal and managerial implications arising from the Y2K problem as they relate to banks in Kenya. It was also aimed at / determining the relative importance of those implications as considered by banks. Finally, the study set out to investigate the nature and extent of provisions made by banks in response to and anticipation of the Y2K problem. The underlying assumption was that the Y2K phenomenon is posing serious challenges to managers, and some of those challenges are of a legal nature. The Y2K phenomenon is new to all and it comes with serious risks to business, and managers must harness their skills and efforts to minimise the risk and its consequences. The study involved distributing a self-administered questionnaire to all the 54 banks operating in Nairobi. The questionnaire sought information on the cost of testing and fixing equipment for Y2K readiness, the budgetary provisions for related work and contingency planning. The nature of contingency plans and aspects of the legal issues considered in addressing the Y2K problem. The results show that: 1. ) Banks in Kenya have not fully considered the legal implications of the Y2K problem 2. ) Banks have considered their own claims against vendors but not those of third parties and customerhgainst them. 3. ) Banks have made provisions for the Y2K problem such as reverting to manual systems. The above results should be interpreted in the context of the limitatioif'of the study, especially the low response rate arising from time constraints and the fact that most banks did not feel obliged to give information on their Y2K projects. The findings will nonetheless be useful to managers who may start addressing the issues hitherto not considered.