Federal Housing Administration: Improvements Needed in Risk Assessment and Human Capital Management

In response, the Federal Housing Administration (FHA) has taken steps to integrate the efforts of the Office of Single Family Housing and the Office of Risk Management. For example, in preparation for an inaugural annual risk assessment completed in September 2013, the Office of Risk Management and Regulatory Affairs developed baseline operational risk assessments using the Office of Single Family Housing's internal quality control initiative reports. In addition, FHA formed an operational risk committee. According to the committee's charter that was approved in March 2013, one objective of the committee was to establish an integrated risk assessment strategy. This committee met for the first time in June 2013, did not meet again for a while, and then began meeting quarterly in fiscal year 2015. According to FHA officials, when they started assessing operational risks quarterly, they adopted aspects of the Office of Single Family Housing's internal quality control initiative and expanded it to cover all of FHA. Taking these steps should help FHA more effectively identify, plan for, and address risk.

In response, the Federal Housing Administration (FHA) completed an inaugural risk assessment for the Office of Single Family Housing in September 2013, and established a quarterly risk assessment process in 2015. For the inaugural risk assessment, the Office of Risk Management and Regulatory Affairs (ORMRA) designed and completed templates for baseline operational risk assessments and frequency and severity charts. ORMRA and the Office of Single Family Housing then conducted site visits to four homeownership centers. As a follow-up to the visits, ORMRA updated and finalized the operational risk assessments and frequency and severity charts to incorporate the findings from the site visits. Beginning in the second quarter of 2015, FHA revised its risk assessment process. According to FHA officials, an operational risk committee meets quarterly to discuss a risk register to which all of the offices within FHA contribute. The officials stated that each quarter, the Office of Risk Management sends a survey to the key leaders within FHA asking them to update the risk register from the prior quarter, including identifying mitigation strategies and any new risks. They noted that the final risk register for each quarter is discussed at the quarterly operational risk committee meeting. To document this process, FHA provided the risk registers from two quarters. Taking these steps should help FHA more effectively identify, plan for, and address risk.

In response, the Federal Housing Administration (FHA) has taken steps to create ongoing mechanisms to anticipate and address risks that might be caused by changing conditions. For example, FHA created committees to address single-family credit and operational risks. The charters for both committees, which were approved in March 2013, indicate that they are to discuss and address emerging risks. According to FHA officials, the credit risk committee uses three different reports to anticipate and address emerging risks. For example, one report includes monthly foreclosure statistics and trends. In addition, FHA officials stated that since the second quarter of 2015, the operational risk committee has used quarterly risk registers to address emerging risks. Taking these steps should help FHA more effectively identify, plan for, and address risk.

In response, the Federal Housing Administration (FHA) has taken a number of steps. In November 2012, it published a workforce analysis and succession plan for the Office of Single Family Housing that (1) presented the demographic profile of the office, including the percentage of employees eligible to retire, (2) identified the general and technical competencies needed by employees in mission critical occupations, (3) acknowledged gaps in critical competencies, and (4) outlined additional steps that need to be taken to address the gaps. The plan also stated that FHA planned to hire a contractor to validate the information contained in the plan. In September 2013, a contractor completed a report containing workforce planning recommendations for FHA. Specifically, the report included (1) a demographic profile, including retirement trends and projections; (2) a competency assessment, including skill gaps; and (3) recommendations that FHA, among other things, conduct continuous skill gap analysis and establish a new and effective succession planning strategy. To implement the contractor's recommendation to conduct continuous skill gap analysis, FHA officials stated that they had developed a competency assessment tool that was to be rolled out soon. According to documents FHA provided, the tool is intended to help managers identify current skill sets and determine gaps with the end goal of determining training needs for employees, and is to be implemented starting in June 2016. Taking these steps should help enhance FHA's ability to identify critical skills and gaps and meet future program demands.

In response, the Federal Housing Administration (FHA) has taken a number of steps. In November 2012, it published a workforce analysis and succession plan for the Office of Single Family Housing that (1) presented the demographic profile of the office, including the percentage of employees eligible to retire, (2) identified the general and technical competencies needed by employees in mission critical occupations, (3) acknowledged gaps in critical competencies, and (4) outlined additional steps that need to be taken to address the gaps. The plan also stated that FHA planned to hire a contractor to validate the information contained in the plan. In September 2013, a contractor completed a report containing workforce planning recommendations for FHA. Specifically, the report included (1) a demographic profile, including retirement trends and projections; (2) a competency assessment, including skill gaps; and (3) recommendations that FHA, among other things, conduct continuous skill gap analysis and establish a new and effective succession planning strategy. To implement the contractor's recommendation to establish a succession planning strategy, FHA has created a Position Organization Listing that lists all positions and vacancies that can be filled in accordance with established ceilings. The tool is to be utilized to identify critical backfills and recruitments as necessary and has an implementation date of mid to late 2016. In addition, FHA has plans to hire and increase utilization of junior staff, reduce the quantity of senior staff to be more in line with federal benchmarks, and offer leadership training. Taking these steps should help enhance FHA's ability to plan for upcoming retirements and meet future program demands.