2015 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. Following are the FDIC’s major accomplishments in improving operational efficiency and effectiveness during 2015.
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 2015, the FDIC workforce planning initiatives emphasized the need to plan for employees to fulfill current and future capabilities 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 2015, the FDIC continued to develop and implement the Workforce Development Initiative, an integrated strategy to address workforce challenges and opportunities. The effort is focused on four broad objectives: (1) attract and develop talented employees across the agency; (2) enhance the capabilities of employees through training and diverse work experiences; (3) encourage employees to engage in active career development planning and seek leadership roles in the FDIC; and (4) build on and strengthen the FDIC’s operations to support these efforts.
In 2015, the FDIC continued to develop the infrastructure, governance, programs, and processes to help meet its long-term workforce and leadership needs. The FDIC is committed to building and expanding its talent pipeline to ensure succession challenges are met. To that end, the agency conducted a cross-divisional succession planning review and talent strategy development process. Senior FDIC leaders convened to discuss emerging talent needs and strategies to address them, including efforts to develop the pipeline of the FDIC’s aspiring leadership pool. Several programs were launched in 2015 focused on enhancing leadership capabilities, including the Leadership Mentoring and Onboarding Programs, expanded external educational opportunities through Harvard’s Kennedy School of Government, and enriched management training.
The FDIC continued to focus on ensuring the availability of a workforce equipped to meet today’s responsibilities, while simultaneously preparing for future capability needs. The FDIC established a Career Paths initiative, targeted at nonsupervisory employees at all levels, to promote the acquisition of cross-organizational skills and knowledge. Additional support is provided to employees seeking professional development opportunities through expanded career management services. Following up on a pilot program launched in 2014, the FDIC evaluated its first-year experience with an effort to increase FDIC employees’ exposure to large bank operations across the agency. Based on initial feedback, the pilot program will be expanded to add six detail opportunities to the ten offered in 2014 to support the growth of the FDIC’s capabilities related to the oversight of SIFIs required under the Dodd-Frank Act.
The FDIC’s strategic workforce planning initiatives require a long-term and sustained focus to identify future workforce and leadership needs, assess current capabilities, support aspiration to management and leadership roles, and develop and source the talent to meet emerging workforce needs. 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), the 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, which celebrated its 10th anniversary in 2015, is an essential part of the FDIC’s ability to provide continual cross-divisional staff mobility. Since the CEP’s inception in 2005, 1,516 individuals have joined the FDIC through this multi-discipline program and more than 700 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.
Employee Learning and Development
The FDIC is committed to the learning and development of its employees throughout their careers to enrich technical proficiency and leadership capacity, supporting career progression and succession management. In 2015, the FDIC focused on developing and implementing comprehensive curricula for its business lines to incorporate lessons learned from the financial crises and preparing 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. 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 2015, 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 posed by the analytical models used by the FDIC in identifying and managing risk. During 2015, the FDIC enhanced policies and controls to govern internal decision support models. The comprehensive, corporate-wide model validation program will ensure that FDIC models are sound through routine testing and evaluation carried out according to tailored model validation programs.
- 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.
Director of the Division of Administration Arleas Upton Kea and Deputy to the Chairman and Chief Operating Officer Barbara A. Ryan accept the award from Max Stier, President and CEO of Partnership for Public Service.
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 2015, 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 enhance communication, provide additional opportunities for employee input and engagement, and improve employee empowerment.
INFORMATION TECHNOLOGY MANAGEMENT
The FDIC recognizes that 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 Technology Innovative Mission Support
In 2015, the FDIC developed and implemented innovative software that enabled our examination stakeholders at the FDIC, FRB, and state banking agencies to better address current and future business challenges. The new Examination Tools Suite (ETS) provides the Corporation with cost and time savings in administration and deployment efforts; ETS also reduces maintenance expenses by centralizing functionality and reducing the overall number of systems supporting the program. ETS introduces wireless on-site networks that enhance the security and accuracy of shared examination data while reducing data redundancy. ETS addresses the risk of technological obsolescence by using technology consistent with the FDIC’s current Enterprise Architecture standards and industry best practices.
The Claims Administration System (CAS) is a system that FDIC personnel use to identify depositors’ insured and uninsured funds in failing and failed financial institutions. For every failing institution, CAS is used before the failure to estimate the amount of uninsured deposits for the least-cost test. When an insured deposit transaction is the least-cost resolution, CAS is used to determine the amount of the depositors’ funds that are insured and that can be transferred to the acquiring institution or paid out directly to the depositor. For all failures, CAS is the system of record for the deposits of the failed institution. During 2015, the FDIC enhanced CAS capabilities in order to “future-proof” the FDIC’s ability to efficiently and effectively manage the increased data requirements for SIFIs that the agency may need to address during the resolution process as required by Dodd-Frank Act regulations.
During 2015, the FDIC strengthened access controls of one of its primary systems for exchanging information with financial institutions, examiners, and other regulators by implementing Multi-Factor Authentication (MFA). MFA is a method to authenticate users by requiring the presentation of two or all of the three following authentication factors: (1) a knowledge factor (something the user knows, such as a password); (2) a possession factor (something the user has, such as a token); or (3) an inherence factor (something the user is, such as a fingerprint). To improve remote access security for these FDIC customers, approximately 18,000 external users were provided MFA technology during the year.
Keeping the FDIC Secure Cybersecurity (Internal)
Like all citizens in our increasingly connected world, the FDIC continues to face serious, wide-ranging threats to our operations, data, and reputation. During 2015, the FDIC continued to improve and evolve a strong and proactive IT security program to effectively mitigate these risks in our cybersecurity landscape.
Phishing and other email scams continue to rise at a steady rate. The FDIC will likely see continued and heightened levels of malicious attacks through email. To strengthen email-related cybersecurity, the FDIC implemented improved data loss prevention controls and products that protect not only the FDIC’s reputation and data assets but also provide protection to the public by helping to ensure only the legitimate use of FDIC credentials.
Finally, the FDIC enhanced its capabilities for quantifying risks posed by IT-related cybersecurity events. To provide management with up-to-date metrics and reporting mechanisms for monitoring their risk and the remediation of that risk, the FDIC implemented changes to its monitoring system to display the numeric Common Vulnerability Scoring System1 (CVSS) scores for all open findings. These scores provide management with a clear numerical representation of their finding’s risk level so that they can better prioritize agency resources for remediating those risks.
1 The CVSS provides an open framework for communicating the characteristics and impacts of IT vulnerabilities.