FDIC: Strengthening Financial Risk Management at the FDIC


		Home > Deposit Insurance > The Deposit Insurance Funds > Strengthening Financial Risk Management at the FDIC

Strengthening Financial Risk Management at the FDIC

Final report - July 16, 2003

PDF file (596 KB File - PDF Help or Hard Copy)

Executive Summary

Introduction

Improving financial reporting � Horizon 1

Building best-practice financial risk management � Horizon 2

Anticipating future needs � Horizon 3

Improving Financial Reporting � Horizon 1

Recommendation 1.1: Refine the Contingent Loss Reserve methodology

How the CLR is calculated

Performance of the CLR

Specifics of Recommendation 1.1 (Refining the CLR methodology)

Recommendation 1.2: Replace the 2-year Projection with a confidence interval around the CLR and a 2-year loss estimate

How the 2-year Projection is calculated

Performance of the 2-year Projection

Specifics of Recommendation 1.2 (Replacing the 2-year Projection)

Recommendation 1.3: Adopt a set of new FRC organizational practices

The current FRC organization and process

Performance of the FRC process

Specifics of Recommendation 1.3 (Adopting a new set of FRC organizational practices)

Building Best-Practice Financial Risk Management � Horizon 2

Recommendation 2.1 � Accelerate development of the new integrated model for financial risk management

The credit risk model concept

Specifics of Recommendation 2.1 (Accelerate development of the integrated model)

Recommendation 2.2 � Build a more integrated risk management organization

Observations on the FDIC�s risk management today

Specific recommendations for strengthening the NRC

Specific recommendations for strengthening the RAC

Specific recommendations for strengthening the FRC

Anticipating Future Needs � Horizon 3

Recommendation 3.1 � Annually assess whether to move to Horizon 3

The Horizon 3 environment

The potential benefits of Horizon 3

The likely costs of Horizon 3

Last Updated 08/21/2003

insurance-research@fdic.gov