Effective Management Of Strategic Resources

Introduction
The FDIC recognizes that it must effectively manage and utilize a number of critical strategic resources in order to successfully carry out its mission and realize the strategic goals outlined in the preceding sections. An overview of the FDIC’s key strategic resources is provided below.

Financial Resources
The FDIC’s operational expenses are largely paid from the insurance funds, and the Corporation seeks to operate cost effectively in fulfillment of its fiduciary responsibility to the funds. To that end, the Corporation engages in a rigorous planning and budgeting process that is designed to ensure that budgeted resources are properly aligned with projected workload. The Corporation also reviews spending variances on a continuous basis and provides an analysis of spending variances to the FDIC Board of Directors on a quarterly basis.

The FDIC will implement an enhanced cost management program in 2005 that will provide managers with additional cost information, including the fully loaded cost of key business processes. The FDIC has also begun to benchmark the cost of selected business processes with those of peer organizations and to use that information to identify possible business process improvements. During the period covered by this plan, the Corporation will explore the use of performance scorecards to assess performance against appropriate cost, timeliness, quality and customer service standards.

Approximately 65 percent of the Corporation’s annual operating expenses are for salaries and other compensation for FDIC employees. For that reason, the Corporation carefully reviews staffing and workload on an ongoing basis and makes appropriate adjustments to authorized staffing, as needed. As indicated below, the FDIC is actively planning for a smaller, more flexible workforce in the future.

Human Capital
The FDIC’s employees are its most important strategic resource. For that reason, it seeks to continue to be the employer of choice within the financial regulatory community and to operate a human resources program that attracts, develops, evaluates, rewards and retains a high quality, results-oriented workforce. This was a difficult challenge over the past 12 years because the Corporation was in a continuous downsizing mode as it completed the residual workload from the banking and thrift crises of the late 1980s and early 1990s. FDIC staffing declined from approximately 23,000 (including employees assigned to the Resolution Trust Corporation) in 1992 to fewer than 5,100 at year-end 2004.

Over the past three years the Corporation has focused considerable resources on human capital planning and has reached several important conclusions about its future human resource requirements. It has determined that the FDIC will need a smaller, more adaptable permanent workforce that is capable of responding in the future to significant unexpected events or changes in workload priorities; that it will require a somewhat different mix of skill sets than are available in the current workforce; and that a more collaborative approach will be required in the future to fulfill critical mission functions. During the period covered by this plan, the FDIC will pursue opportunities to begin reshaping its workforce to better align it with anticipated future human resource requirements.

The FDIC is already in the process of developing and implementing several key structural components of its human capital strategy for the future:

• Implementation of pay-at-risk compensation and bonus programs.
• Implementation of a restructured executive and managerial program.
• Enhancement of employee training and development through a recently established Corporate University.
• Pursuit of new personnel authorities that will provide greater flexibility in managing the Corporation’s human resources.
• Establishment of a new Corporate Employee Program that encourages and rewards cross-organizational mobility and promotes experience in multiple FDIC business lines.
• Identification of succession planning and management strategies.

Much more remains to be accomplished over the next several years. The Corporation must continue to refine its future workforce requirements and to identify strategies for attracting and retaining employees from a more diverse and competitive employee pool.

Information Technology
The Corporation is committed to using information technology (IT) to improve the operational efficiency of its business processes. Over the past three years, the Corporation has made great strides in making the IT capital planning and investment management (CPIM) process more effective. The CPIM process is overseen by the Corporation’s Capital Investment Review Committee, which is chaired jointly by the Chief Information Officer and the Chief Financial Officer and includes key senior managers. IT investments are strategically directed and are judged by their impact on the effectiveness and/or efficiency of the FDIC’s mission-critical functions. Proposals for new investments are considered against gaps in current capabilities.

The revised CPIM process is integrated with the FDIC’s Enterprise Architecture (EA) process. The initial foundation work for the EA was completed in 2003. During the period covered by this plan, the FDIC will continue to enhance the EA program. This will facilitate the identification of duplicative resources/investments, gaps, and opportunities for internal and external collaboration and will result in operational improvements and cost-effective solutions to business requirements. This enterprise focus will permit the Corporation to reduce its application systems inventory and consolidate its technology platforms. In addition, the Corporation will implement an IT research and development program in order to promote an environment where IT research and innovation activities support business strategies.

The FDIC will also embrace the principles associated with the Capability Maturity Model Integration (CMMI) developed by the Carnegie Mellon Software Engineering Institute. CMMI helps organizations increase the maturity of their people, processes and technology assets to improve long-term business performance. The FDIC’s target is to reach level 3 of the 5-step maturity range, which represents a considerable commitment to the achievement of quality processes. Starting in 2005, the Corporation will employ the Rational Unified Process (RUP), a flexible, iterative system development methodology. FDIC’s adoption of RUP will provide an improved system development methodology that will minimize risk, provide predictable results, and deliver high quality software on time and within budget.

The Corporation is also strongly committed to maintaining an effective IT security program which provides a continuous cycle for assessing risk and implementing effective security procedures to proactively ensure the reliability, availability and confidentiality of information. IT security for major enterprise systems has been identified as a reportable condition by the Government Accountability Office (GAO) in its audits of the FDIC’s annual financial statements for several years, and the Corporation is committed to the ongoing improvement of its IT security program in order to eliminate that reportable condition. The most recent assessment by the GAO indicates that the FDIC has made significant progress in addressing previously identified weaknesses in information systems controls.
The Corporation has substantially increased the resources devoted to IT security and will continue to appropriately address the constantly changing federal security requirements and the evolving needs of the FDIC.

Business Continuity Planning
After September 11, 2001, corporate business continuity planning was elevated to an enterprise-wide level and has undergone continuous improvements. Enterprise-wide business continuity planning is more than the recovery of the technology; it is the recovery of the business, regardless of the nature of the disruption. The FDIC has developed an Emergency Preparedness Program (EPP) that provides for the safety and security of its personnel through the Emergency Response Plan and ensures that its critical business functions remain operational during any emergency, following the guidelines of the Business Continuity Plan.

During 2004, a number of initiatives were completed to strengthen the EPP, including conducting a business impact analysis (BIA) with all FDIC divisions and offices that resulted in enhanced planning for recovery of information technology and other critical business functions. During each year from 2005 through 2010, the FDIC plans similar initiatives to improve the EPP and develop long-range goals. In addition, the FDIC intends to expand its testing program to include more functional and “live” testing to ensure that every participant understands his/her responsibilities.

Enterprise Risk Management
The FDIC has traditionally had a strong internal control and risk management program that has contributed to the efficient and effective operation of the Corporation. Under the program, various sources of FDIC and industry information are analyzed to identify emerging internal control and risk-management issues. In addition, FDIC divisions and offices conduct scheduled internal control reviews in order to monitor risks and to verify that corrective actions have resolved any previously identified internal control weaknesses. During the period covered by this plan, the Corporation will enhance this program by adding an enterprise risk-management focus. Another component contributing to the Corporation’s enterprise risk management program is the Office of Inspector General which is addressed in the following section.

Office of Inspector General
The Office of Inspector General (OIG) is an independent office within the FDIC that was established under the Inspector General Act of 1978 and promotes the economy, efficiency, effectiveness and integrity of FDIC programs and activities. The OIG has developed a strategic plan that aligns with the FDIC’s strategic goals and objectives and focuses on adding value to FDIC programs and activities.