2014 Annual Report
I. Management’s Discussion and Analysis
The Year in Review
EFFECTIVE MANAGEMENT OF STRATEGIC RESOURCES
The FDIC recognizes that it must effectively manage its human, financial, and technological resources to successfully carry out its mission and meet the performance goals and targets set forth in its annual performance plan. The FDIC must align these strategic resources with its mission and goals and deploy them where they are most needed to enhance its operational effectiveness and minimize potential financial risks to the DIF. Major accomplishments in improving the FDIC’s operational efficiency and effectiveness during 2014 follow.
Human Capital Management
The FDIC’s human capital management programs are designed to attract, train and develop, reward, and retain a highly skilled, diverse, and results-oriented workforce. In 2014, FDIC workforce planning initiatives emphasized the need to plan for employees to fulfill current and future requirements and leadership needs. This focus ensures that the FDIC has a workforce positioned to meet today’s core responsibilities while preparing to fulfill its mission in the years ahead.
Strategic Workforce Planning and Readiness
During 2014, the FDIC continued to develop and began implementation of the Workforce Development initiative. This effort began with an assessment of the current talent pipeline for senior leadership positions. Based on the findings, the FDIC elected to broaden the scope of the initiative beyond succession planning to include the development of strategies designed to address comprehensive workforce development challenges and opportunities. The initiative is focused on four broad objectives: attract and develop talented employees across the agency, enhance the capabilities of employees through training and diverse work experiences, encourage employees to engage in active career development planning and seek leadership roles in the FDIC, and build on and strengthen the FDIC’s operations to best support these efforts.
In 2014, the FDIC embarked on planning and developing the infrastructure, governance, programs, and processes to help meet its long-term workforce needs. The FDIC is committed to building and maintaining its talent pipeline to ensure succession challenges are fully addressed. It will take several cycles of identifying future workforce and leadership needs; assessing current workforce capabilities; supporting aspiration to leadership and management roles; and developing and sourcing the talent to meet emerging workforce needs. As such, the FDIC’s Workforce Development initiative is a dynamic process rather than a one-time, static event.
Simultaneously, the FDIC continued to focus on ensuring the availability of a workforce prepared to address today’s responsibilities, especially related to the oversight of SIFIs required under the Dodd-Frank Act. As an outgrowth of strategic workforce planning, the FDIC established a new employee development program to expand the number of FDIC employees who have broad, cross-divisional experience with the largest and most complex FDIC-insured banks and BHCs. The program provides experience in supervision, risk analysis and monitoring, risk-based pricing and deposit insurance fund management, and resolution planning and resolvability. Twelve employees were selected for this rotational program in 2014.
Workforce planning efforts also addressed the need to continue winding down bank closure activities, based on the decrease in the number of financial institution failures and institutions in at-risk categories. In 2014, the FDIC continued to evaluate its staffing needs in a post-crisis environment and released some of the temporary staff as their term appointments expired. The FDIC has extended appointments only for the most critical temporary positions, where workload continues to exist, to address post-closure activity, which typically extends for five to seven years after a bank fails. The bank resolution workload is expected to slow considerably over the next few years.
The quality and commitment of FDIC employees have allowed the agency to respond effectively in times of crisis, while continuing to deliver on its core mission responsibilities. Through further development of its human capital strategies, the FDIC will work to ensure that the future FDIC workforce is as prepared, capable, and dedicated as the one it has today.
Corporate Employee Program
The FDIC’s Corporate Employee Program (CEP) sponsors the development of newly hired financial institution specialists (FISs) in entry-level positions. The CEP encompasses major FDIC divisions where FISs are trained to become part of a highly effective workforce. During the first-year rotation within the program, FISs gain experience and knowledge in the core business of the FDIC, including the Division of Depositor and Consumer Protection (DCP), Division of Risk Management Supervision (RMS), the Division of Resolutions and Receiverships (DRR), and the Division of Insurance (DIR). At the conclusion of the rotation period, FISs are placed within RMS, DCP, or DRR, where they continue their career path to become commissioned examiners or resolutions and receiverships specialists.
The CEP is an essential part of the FDIC’s ability to provide continual cross-divisional staff mobility. As a result, the FDIC is capable of responding rapidly to shifting priorities and changes in workload while achieving its corporate mission. Since the CEP’s inception in 2005, 1,391 individuals have joined the FDIC through this multi-discipline program and approximately 628 have become commissioned examiners after successfully completing the program’s requirements.
The FDIC continues to sponsor the Financial Management Scholars Program (FMSP), an additional hiring source for the CEP. Participants in the FMSP complete an internship with the FDIC the summer following the conclusion of their junior year. As a result, the FDIC is able to recruit and hire highly talented and well-qualified students into the CEP ahead of other prospective employers. The program serves as an additional venue to recruit talent. For 2015, the FDIC will continue to augment its workforce by fully utilizing the capacity of the CEP, including the FMSP.
Employee Learning and Development
The FDIC is committed to the learning and development of its employees throughout their career to enrich technical proficiency and leadership capacity, supporting career progression and succession management. In 2014, the FDIC focused on developing and implementing comprehensive curricula for its business lines to incorporate lessons learned from the financial crises and prepare employees to meet new challenges. Such training, which includes both classroom and online instruction for maximum flexibility, is a critical part of workforce and succession planning as more experienced employees become eligible for retirement.
The FDIC also offers a comprehensive leadership development program that combines core courses, electives, and other enrichment opportunities to develop employees at all levels. From new employees to new managers, the FDIC provides employees with targeted leadership development opportunities that align with key leadership competencies. The FDIC is expanding the use of strategic simulations to support corporate readiness and preparedness. In addition to a broad array of internally developed and administered courses, the FDIC also provides its employees with funds and/or time to participate in external training to support their career development.
Corporate Risk Management
During 2014, the Office of Corporate Risk Management (OCRM) worked with divisions and offices to advance common agency-wide processes for identifying, managing, and mitigating risks to the FDIC. OCRM assisted the Enterprise Risk Committee, Executive Management Committee, External Risk Forum, and Management Risk Roundtable in reviewing risks across the agency. OCRM monitors material risks and mitigation activities, including the following:
- Risks to the agency’s ability to conduct its mission essential functions under all threats and conditions, as described in its Continuity of Operations Plan and Business Continuity Plan.
- Risks to the financial system posed by the extended current low level of interest rates.
- Risks to the deposit insurance system arising from new products and services with characteristics very different from traditional loan and deposit products.
- Risks posed by the analytical models used by the FDIC in identifying and managing risk.
- Risks associated with governance and development of large-scale IT projects.
- Risks posed to the agency and to the financial services industry by concerted attempts to penetrate, compromise, and disrupt the information systems that are essential to their effective operation.
The FDIC continually evaluates its human capital programs and strategies to ensure that it remains an employer of choice and that all of its employees are fully engaged and aligned with the mission. The FDIC uses the Federal Employee Viewpoint Survey mandated by Congress to solicit information from employees and takes an agency-wide approach to address key issues identified in the survey. In December 2014, the FDIC received an award from the Partnership for Public Service for being ranked number one among mid-sized federal agencies on the Best Places to Work in the Federal Government® list. Effective leadership is the primary factor driving employee satisfaction and commitment in the federal workplace, according to a report by the Partnership for Public Service.
The FDIC’s Workplace Excellence (WE) program plays an important role in helping the FDIC engage employees. The WE program is composed of a national-level WE Steering Committee and Division/Office WE Councils that are focused on maintaining, enhancing, and institutionalizing a positive workplace environment throughout the agency. In addition to the WE program, the FDIC-National Treasury Employees Union Labor Management Forum serves as a mechanism for the union and employees to have pre-decisional input on workplace matters. The WE program and Labor Management Forum enhances communication, provides additional opportunities for employee input and engagement, and improves employee empowerment.
INFORMATION TECHNOLOGY MANAGEMENT
The FDIC recognizes secure information technology (IT) solutions are a critical and transformative resource for the successful accomplishment of the agency’s business objectives. The FDIC relies on the efficient, innovative, and secure business capabilities that IT provides to ensure and enhance mission achievement.
Information resources are subject to serious threats that can have wide-ranging adverse impacts on the FDIC’s operations, reputation, and ultimately the ability to accomplish its mission. The continually changing landscape of threats poses significant security challenges for the FDIC, the public, and the nation. Several serious widespread vulnerabilities, including the Heartbleed, Shellshock, and POODLE vulnerabilities, were of specific concern for the FDIC in 2014. The FDIC recognizes that protections against today’s numerous and sophisticated array of cyber threats requires constant vigilance and rapidly evolving security solutions.
As threats continued to intensify from cyber criminals, hacktivists, and foreign governments, multiple defenses were necessary to address each of the different motivations, intents, and capabilities of attacks. The increasing threat of cyber-attacks required the FDIC to implement improved strategies for ensuring the security of the FDIC’s data (including private, personal data) and IT infrastructure. In addition, the FDIC developed new cybersecurity capabilities for detecting incidents earlier and incorporated the capabilities together in a comprehensive framework to minimize the impact on operations and critical infrastructure, resulting in reduced risk.
The Information Security and Privacy Staff protects the FDIC's networks and systems from threats and attacks.