Cigfo Guidance in Preparing for and Managing Crises (Redacted)

Source document: Cigfo Guidance in Preparing for and Managing Crises (Redacted); document type: inspector-general-sigpr-reports.

Full text

June
2022
CIGFO-2022-01
Council of Inspectors General
on Financial Oversight
Guidance in Preparing for and
Managing Crises

0 OIG :
 i:!:: ..... 1 G .
Jl tA .•
Office oflnspfflor General
M
llo.tdofGow--...  .. -s,;,, ...
once ol lnspectorGenef'OI
.
Cel\$11-fdlill'Htl"A_&.I,., ..
REDACTED VERSION
This is a redacted version of a publicly available report. Portions of the report containing sensitive information have been redacted.

This page is intentionally blank

iii
Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
Table of Contents

Table of Contents
Transmittal Letter  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  v
Guidance in Preparing for and Managing Crises  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 1
Collaboration and Pre-Crisis Planning Activities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 6
Agencies’ Crisis Readiness Plan Elements .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  7
Agencies’ Crisis Management .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  9
Conclusion .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .12
APPENDIX I: Abbreviations  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .13
APPENDIX II: FSOC Response  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .14
APPENDIX III: Sources Used by the CIGFO Working Group to Develop Guidance .  .  .  .  .  .  .  .  .  .  .  .16
APPENDIX IV CIGFO Working Group  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 20

This page is intentionally blank

v
Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises

June 2022
The Honorable Janet Yellen
Chair, Financial Stability Oversight Council
Washington, D .C . 20220
Dear Madam Chairwoman:
I am transmitting to you the Council of Inspectors General on Financial Oversight (CIGFO)
report titled, CIGFO Guidance in Preparing for and Managing Crises
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)
authorizes CIGFO to convene working groups of its members to address issues within its
jurisdiction . Accordingly, CIGFO convened a Working Group in August 2020 to compile
forward-looking guidance for the Financial Stability Oversight Council (FSOC) and its
members to consider in preparing for and managing a crisis . This effort was undertaken at a
critical time in our nation, precipitated by the COVID-19 pandemic .
This guidance is intended to be a compilation of lessons learned drawn from the experiences
of federal agencies during prior crises and any learned during the current pandemic . This
forward-looking guidance will facilitate effective crisis response as FSOC fulfills its mission
to identify threats to the financial stability of the country, promote market discipline, and
respond to emerging threats to the stability of the U .S . financial system .
This guidance does not assess the degree to which the FSOC member agencies employ
any of the actions presented herein . Rather, the purpose of this guidance is to compile
information and activities that agencies and CIGFO Offices of Inspector General identified as
integral to pre-crisis planning and crisis management so that FSOC and its member agencies
can evaluate its existing efforts and initiate new ones, as needed, consistent with each
organization’s mission . We are not making any recommendations to FSOC as a result of this
effort .
I would like to take this opportunity to thank the FSOC members for their support, especially
those Treasury officials who assisted with this effort .
CIGFO looks forward to working with you on this and other issues . In accordance with the
Dodd-Frank Act, CIGFO is also providing this report to Congress .
Sincerely,
/s/
Richard K . Delmar
Acting Chair, CIGFO
Deputy Inspector General, Department of the Treasury

This page is intentionally blank

1
Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
Guidance in Preparing for and Managing Crises

Guidance in Preparing for and
Managing Crises
The Council of Inspectors General on
Financial Oversight (CIGFO) provides
oversight of the Financial Stability Oversight
Council (FSOC) . CIGFO members include
nine Inspectors General (IG) with oversight
authority for the federal member agencies
of FSOC .1 In August 2020, CIGFO convened
a Working Group to develop guidance for
FSOC and its member agencies to consider
in preparing for and managing future crises .
CIGFO derived this guidance from the
crisis response experiences of both the
contributing CIGFO Office of Inspector
General (OIG) Working Group members
(CIGFO Working Group) and the federal
agencies they oversee .2 CIGFO OIGs
identified practices and lessons learned by
their respective agencies from prior crises
and the current pandemic .3 The CIGFO
Working Group analyzed these submissions
and summarized the practices and lessons
learned from the financial regulators into this
guidance . In addition, the Working Group
reviewed previous reports issued by the
International Monetary Fund (IMF) and the
U .S . Government Accountability Office (GAO)
regarding crisis preparedness actions and
recommendations for FSOC . The Working
Group also interviewed FSOC officials . This
guidance does not assess the degree to
which the FSOC member agencies employ
any of the actions presented herein . Rather,
the purpose of this guidance is to compile
information and activities that agencies
and OIGs identified as integral to pre-crisis
planning and crisis management so that
FSOC and its member agencies can evaluate
their existing efforts and initiate new ones, as
needed, consistent with each organization’s
mission .
In 2010, in the wake of the 2007-2009 Great
Recession, the Dodd-Frank Wall Street
Reform and Consumer Protection Act (Dodd-
Frank Act) was enacted to “promote the
1 The nine CIGFO members include the Inspectors General from the Board of Governors of the Federal Reserve System (FRB),
Commodity Futures Trading Commission (CFTC), U .S . Department of Housing and Urban Development (HUD), Department of the
Treasury (Treasury), Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Agency (FHFA), National Credit Union
Administration (NCUA), Securities and Exchange Commission (SEC), and the Special Inspector General for the Troubled Asset Relief
Program (SIGTARP) .
2 The Working Group project was performed in accordance with CIGIE’s Quality Standards for Federal Offices of Inspector General
(Silver Book) . These quality standards, as contained in the Agile Products Toolkit https://www .pandemicoversight .gov/media/file/
agile-products-toolkit0pdf), include independence, analysis, evidence review, indexing and referencing, and supervision .
3 The CIGFO Working Group collected information from the OIGs for the FRB (including information relating to the Consumer
Financial Protection Bureau (CFPB)), CFTC, Treasury, FDIC, FHFA, NCUA, SEC, and SIGTARP .

Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
2

Guidance in Preparing for and Managing Crises
financial stability of the United States .”4 As
a part of this effort, the Dodd-Frank Act
created the FSOC, whose members include
the federal financial regulatory agencies .5 The
Act conferred upon FSOC the authority to
respond to emerging threats and to identify
risks to the financial stability of the United
States .6 To meet these responsibilities, the
Dodd-Frank Act assigned FSOC with, among
other duties: (1) collecting information from
member agencies; (2) facilitating information
sharing and coordination among the member
agencies; and (3) recommending to the
member agencies general supervisory
priorities and principles that reflect member
agency discussions .7
During the past two years, FSOC has served
as a forum for federal and state regulators
to collect information, analyze risks, share
information, and coordinate their responses
to the economic shock caused by the
Coronavirus Disease 2019 (COVID-19) .8
However, FSOC’s coordination role is not
limited to responding to emerging threats,
such as COVID-19 . FSOC is also authorized
to identify risks to the United States’
financial stability that could arise outside of
the financial services marketplace, such as
those that could arise from a future crisis .
FSOC has an opportunity to serve in this
coordination role by collecting and sharing
information relating to crisis preparedness
and then identifying the risks to the financial
stability of the United States associated
with the failure to prepare for future crises .
Using this coordination role to focus on
crisis preparedness and identifying risks
associated with agencies’ crisis preparedness
is a role that FSOC has not undertaken --
notwithstanding multiple recommendations
by different oversight authorities .
For example, both the IMF and GAO have
recommended that FSOC enhance its
crisis preparedness role . In 2015, the IMF
recommended that FSOC assume a formal
crisis preparedness and management
role . This recommendation remains
unimplemented, and the IMF reiterated this
recommendation to FSOC in its August 2020
United States Financial System Stability
Assessment 9 In addition, GAO recommended
in a December 2020 report that FSOC
conduct scenario-based exercises intended
to evaluate capabilities for responding to
crises .10 FSOC neither agreed nor disagreed
with the GAO recommendation . On January
4 Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub . L . No . 111-203, 124 Stat . 1376 (2010) .
5 FSOC is composed of 15 members: 10 voting members and 5 nonvoting members . Voting members include the chair of FSOC
(Treasury Secretary); heads of FDIC, FRB, OCC, NCUA, SEC, CFTC, FHFA, and CFPB; and an independent insurance expert
appointed by the President . Nonvoting members include the directors of Treasury’s Office of Financial Research (OFR) and Federal
Insurance Office (FIO), and state regulatory representatives, one each for insurance, banking, and securities . 12 U .S .C . § 5321 .
6 Section 112(a)(1) of the Dodd-Frank Act, 124 Stat . at 1394 (codified at 12 U .S .C . § 5322(a)(1)) .
7 Section 112(a)(2) of the Dodd-Frank Act, 124 Stat . at 1395 (codified at 12 U .S .C . § 5322(a)(2)) .
8 Treasury Department, Press Release, Financial Stability Oversight Council Releases Annual Report (Dec . 3, 2020) .
9 International Monetary Fund, United States Financial System Stability Assessment (August 2020) at 80, App . VII at 105 (reiterating
the 2015 IMF recommendation to assign a formal crisis preparedness and management coordinating role to FSOC and noting that
the earlier recommendation remains unimplemented) .
10 U .S . Government Accountability Office, Financial Stability: Agencies Have Not Found Leveraged Lending to Significantly Threaten
Stability but Remain Cautious Amid Pandemic (GAO-21-167) (Dec . 2020) at 58 .

3
Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
Guidance in Preparing for and Managing Crises

26, 2021, the CIGFO Working Group
requested information regarding the actions
that FSOC had taken or intended to take to
address the IMF and GAO recommendations .
Subsequent to the issuance of a Discussion
Draft of this guidance on June 7, 2021, FSOC
informed the CIGFO Working Group that it
was in the process of compiling its Article
IV responses to the IMF recommendations11
and would share them with the CIGFO
Working Group when the IMF report is
published . On July 22, 2021, FSOC shared the
U .S . Authorities’ Article IV responses12 with
the CIGFO Working Group . FSOC asserted
that its role “is not intended to serve as the
primary responder during times of financial
crisis . Rather, its purpose is to identify
potential vulnerabilities and emerging
threats to financial stability, and to develop
recommendations for addressing those risks .”
On June 14, 2021, FSOC also reiterated its
earlier statements regarding the GAO report
(December 2020)13 in letters to various
congressional committees but did not
describe any additional specific actions that
FSOC had initiated or intended to initiate to
address the GAO recommendation .14
FSOC and its member agencies have an
opportunity to work together to plan for
future crises . Our guidance outlined herein
can serve as a reference tool for both FSOC
and its member agencies . For FSOC, this
information can be used to assist in fulfilling
its coordination role and to help it identify
risks to the financial stability of the United
States by considering: (1) the type of crisis
planning materials that are available for
collection and dissemination to and from
member agencies, (2) the threats posed to
the United States’ financial stability relating
to potential gaps in crisis planning activities,
and (3) the appropriateness of prioritizing
crisis planning, consistent with member
agencies’ discussions . For member agencies,
this guidance provides information about
crisis readiness practices that can be used to:
(1) reinforce and supplement current crisis
readiness practices; (2) identify potential
gaps in current crisis readiness plans; and (3)
assist in designing and managing future crisis
programs .
11Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year . FSOC’s
Article IV responses are included in the IMF report .
12 International Monetary Fund, United States 2021 Article IV Consultation – Press Release; Staff Report; and Statement by
the Executive Director for the United States (July 2021); Appendix IV “Implementation of 2020 FSAP [Financial Sector
Assessment Program] Recommendations” contains the U .S . Authorities’ self-assessment of the status of implementation for the
recommendations of the 2020 FSAP and is not necessarily the assessment of IMF staff . https://www .imf .org/en/Publications/CR/
Issues/2021/07/22/United-States-2021-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-462540
13 The GAO report recommended that FSOC, in consultation with its members, “should incorporate regular scenario-based exercises
designed to evaluate individual FSOC member and collective capabilities for responding to crises into its risk-assessment activities .
These could include tabletop exercises that assume increased financial risks under plausible macroeconomic and financial
conditions that may require multiple regulators to respond .” GAO, Financial Stability: Agencies Have Not Found Leveraged Lending
to Significantly Threaten Stability but Remain Cautious Amid Pandemic, at 58 (GAO-21-167) (December 2020) . In its December 2020
response to the GAO recommendation, FSOC explained that it leverages the work and expertise of its member agencies (i .e ., heads
of federal and state financial regulatory agencies) and that a number of financial regulators organize tabletop exercises in which
FSOC staff regularly participate . FSOC further noted that it initiates additional activities, beyond those of its individual member
agencies, including rigorous analyses for interagency discussion . Id . at 82 .
14 Instead, FSOC’s correspondence to six congressional committees reiterated that it participates in tabletop exercises organized
by its member financial regulators and engages in independent activities to supplement the work of member agencies, including
generating rigorous analyses for interagency discussion .

Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
4

Guidance in Preparing for and Managing Crises
Prudent crisis preparedness can help
agencies manage an array of potential
crises . According to the World Economic
Forum, risks that could affect the world
economy and the financial stability of the
United States include environmental risks
caused by extreme weather events such
as floods and hurricanes; natural disasters
such as earthquakes and tsunamis; climate
change that could amplify credit, liquidity,
and counterparty risk that challenge financial
management; technological risks such as
large-scale cyberattacks or malware causing
economic damages; violent protests; and
geopolitical risks such as terrorist attacks
and the deployment of nuclear, chemical,
biological or radiological weapons .15 At the
FSOC meeting on March 31, 2021, the Chair of
FSOC, the Secretary of the Treasury, stated
during the Open Session:
Climate change is obviously
the big one . It is an existential
threat to our environment, and
it poses a tremendous risk to
our country’s financial stability .
 .  .  . Our financial system must
be prepared for the market and
credit risks of these climate-
related events  .  .  .  . On all these
fronts, the [Financial Stability
Oversight] Council has an
important role to play, helping
to coordinate regulators’
collective efforts to improve the
measurement and management
of climate-related risks in the
financial system .16
Such events could lead to the disruption of
key infrastructure elements for extended
periods of time, including:
•  Limited or no electrical power,
•  Limited or no email or internet
communications,
•  Disrupted food and water supplies,
and
•  Disrupted transportation routes .
In particular, the current COVID-19 pandemic
environment has highlighted the financial
system’s reliance on electrical and cyber
connections where human contact is limited .
It is important for FSOC and the financial
regulators to be able to respond to such
emerging threats, but also be prepared to
identify risks that may exist relating to the
organizations’ overall crisis preparedness .
The crisis preparedness and management
practices identified and summarized by
the CIGFO Working Group OIGs were
based upon agency planning documents to
address market disruptions; contingency and
crisis plans; stress tests; testing of market
coordination procedures; retrospective
analyses of regulator responses to prior
crises; business resiliency management
analyses; a prioritized supervision framework
15 The World Economic Forum is an international organization established in 1971 for public-private cooperation . The Global Risks
Report 2018 identified a list of hazardous risks that could affect the world economy and thereby potentially affect insured
depository institutions .
16 Secretary Janet L . Yellen, Financial Stability Oversight Council meeting (Mar . 31, 2021) https://home .treasury .gov/news/press­
releases/jy0092

5
Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
Guidance in Preparing for and Managing Crises

in response to the COVID-19 pandemic;
crisis management plans; economic impact
analyses following a crisis; plans for cyber
incident response; lesson learned reviews;
strategic plan initiatives to improve crisis
management and response capabilities;
audits of agency responses to emerging
risks; international peer reviews of agency
approaches to supervision and regulation
following financial crises; and audits to assess
regulatory activities under Presidential Policy
Directive 21 .17 The guidance derived from
these sources broadly fall into the following
categories:
1 .  Collaboration and Pre-Crisis Planning
Activities
•  Define agency mandates, roles, and
responsibilities
•  Facilitate information sharing
proactively
•  Strive for a shared view of market
conditions
•  Implement continuous monitoring
activities
2 .  Agencies’ Crisis Readiness Plan Elements
•  Establish individual roles and
responsibilities related to plans
•  Describe triggering events
•  Identify relevant legal authorities and
tools, and potential emergency actions
•  Develop communication plans and
options
•  Prioritize system capacity, and cyber
and information security (aligned with
existing continuity capabilities)
•  Provide for testing, evaluation, review,
revision, and training
•  Provide for reporting
3 .  Agencies’ Crisis Management
•  Implement leadership response
•  Coordinate among member agencies
•  Communicate to internal and external
stakeholders
•  Assess resources
•  Supervise markets and regulated
entities
•  Deploy response programs
•  Evaluate lessons learned
CIGFO intends this guidance to assist FSOC
and its member agencies with coordinating
and planning for future crises in order to help
identify and mitigate risks to the financial
stability of the United States associated with
potential gaps in crisis preparedness . We
provide this guidance in support of FSOC
and its member agencies’ ongoing efforts,
recognizing that some activities are already
broadly in practice, while other activities
presented here can promote new initiatives
that enhance the wider crisis planning effort .
A list of the documents collected from the
FSOC federal member agencies and their
OIGs that were considered by the CIGFO
Working Group in compiling the guidance is
provided in Appendix III .
17 The Presidential Policy Directive 21, released on February 12, 2013, established a national policy on critical infrastructure security and
resilience, which is a shared responsibility among federal, state, local, tribal, and territorial entities, and public and private owners
and operators of critical infrastructure . The policy’s goals are to enhance overall coordination and collaboration and clarify the
functions, roles, and responsibilities related to critical infrastructure .

Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
6

Guidance in Preparing for and Managing Crises
Collaboration and Pre-Crisis
Planning Activities
A proactive crisis readiness effort involves
working collaboratively to coordinate crisis
readiness efforts across federal and state
agencies and consulting with international
agencies and organizations as needed . Pre­
crisis preparations rely on: (1) identifying
risks and conducting scenario analyses
on options for how best to contain them
before they escalate into crises, and (2)
developing plans ahead of time that outline
how an agency will respond to crises in
case they materialize, known as crisis
readiness planning . Member agencies may
have different but overlapping missions,
goals, responsibilities, and communication
strategies . For these reasons, pre-planning
and coordination among FSOC members is
critical and includes the following actions:
•  Define Agency Mandates, Roles,
and Responsibilities . Having a well-
defined mandate and clear roles and
responsibilities ensures the broad
coverage of different risk categories
while preventing the duplication of
agency efforts, both prior to and
during a crisis . Clarity in such roles and
responsibilities is critical, especially
because of the complexity and
overlapping responsibilities among FSOC
member agencies . Documenting and
understanding agency mandates and
roles during pre-crisis planning can assist
FSOC and member agencies in conveying
consistent messages to regulated entities
during a crisis .
•  Facilitate Information Sharing Proactively.
Promoting proactive information sharing
relating to crisis preparations among
the agencies facilitates coordination and
prevents duplication of efforts .
•  Strive for a Shared View of Market
Conditions. Striving to share a
common view of the overall condition
and risks within the financial markets
is essential (including as emerging
risks are identified) . Coordination of
interdisciplinary subject matter experts
enables agencies to: (1) take a holistic view
of oversight areas and associated risks;
(2) develop focused guidance; (3) share
information across internal and external
components; and (4) communicate
consistently when a crisis arises .
•  Implement Continuous Monitoring
Activities. Monitoring vulnerabilities to
the stability of the U .S . financial sector is
critical .18 The goal of pre-crisis monitoring
activities in preparing for a crisis is to
limit and mitigate risks . Such monitoring
activities include:
»  Establishing risk committees to
proactively evaluate risks to the
financial system by capturing the
collective views of multiple agencies,
categorizing risks by severity, and
reporting the consensus perspective
18 Financial Stability Oversight Council, Department of the Treasury, 2020 Annual Report (2020) .

7
Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
Guidance in Preparing for and Managing Crises

throughout the FSOC community;
»  Conducting market surveillance to
monitor for market disruption risk and
requiring regulated entities to disclose
market disruptions;19
»  Monitoring and updating counterparty
credit risk to enable FSOC and
member agencies to quickly and
accurately assess risk exposures;
»  Performing stress tests to identify
sources of strain and establish
strategies for addressing liquidity
shortfalls in emergencies;
»  Generating risk assessments that
account for a range of crisis scenarios
that could affect financial stability and
their impact and probability; and
»  Conducting supervisory reviews of
regulated entities’ preparedness and
resilience to crisis events .20
Thereafter, using the results of these
monitoring activities helps to identify the
array of risks to be addressed in crisis
readiness plans .
Agencies’ Crisis Readiness Plan
Elements
Crisis readiness plans outline how an agency
will operate in, and respond to, an array
of crisis scenarios . Crisis readiness plans
create an overarching crisis management
framework for strategic decision making,
communication, and coordination . Such a
plan or management framework can include:
(1) an agency-wide, all-hazards readiness
plan, and (2) agency-wide hazard-specific
readiness plans, as needed, that integrate
divisional plans containing requirements
unique to certain types of crises . Effective
crisis readiness planning includes input
from and consultation with relevant agency
stakeholders . Some agencies have made
crisis preparedness an explicit goal in their
strategic plans . At a minimum, these plans
achieve greater impact when they include
the following elements:
•  Establish Roles and Responsibilities.
Identify and establish the roles and
responsibilities of the individuals and
groups involved in a crisis response .
This includes identifying a high-level
crisis leadership team and describing
its responsibilities . A crisis leadership
team that includes an organization’s
senior leadership can achieve greater
impact . This team is equipped with both
an enterprise-wide perspective and
19 Market surveillance includes a broader view of how risks and interconnections tie to nonfinancial businesses and the real economy .
20 Supervisory reviews should be founded on detailed written standards for cyclical, process-oriented reviews of a regulated entity’s
preparedness and business resiliency plans to ensure that the regulated entity has a clearly defined path to continue mission critical
operations during a widespread disruption, such as a natural disaster or the loss of a critical computer system .

Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
8

Guidance in Preparing for and Managing Crises
the authority to facilitate the efficient
sharing of relevant information during a
crisis and in managing the operational
readiness tasks . Prior to crises, agencies
also designate the staff responsible for
implementing each aspect of a crisis
response plan to ensure that relevant staff
understand how to execute their roles
and are prepared to do so when the need
arises .
•  Describe Triggering Events . Defining
what constitutes a crisis that would
trigger initiation of the crisis response
plan is important . When triggering events
activate the crisis plan, the responsible
crisis leadership officials would then
undertake affirmative steps to initiate the
plan .
•  Identify Relevant Legal Authorities and
Tools, and Compile a List of Potential
Emergency Actions. Prior to a crisis, it is
important to document a list of available
legal tools and authorities to assist in crisis
response . During a crisis, agencies may
not have the luxury of time and resources
to identify their relevant legal tools and
authorities . Therefore, it is beneficial
during steady state that an agency
conducts scenario planning and analysis
that thoroughly vets all legal authorities .
This list of available legal authorities can
include potential emergency actions that
leadership may consider in response to
various crisis events, as well as regulatory
authorities available to, among other
things, provide liquidity to financial
institutions, support financial market
infrastructures, facilitate the restructuring
of troubled institutions, and provide
regulatory relief . Such preparedness
efforts also can include considering
legal authorities that empower agencies
with multiple options and flexibility to
award and administer contracts and hire
and deploy staff in response to a crisis .
Agencies can also identify any legal
authorities or tools they do not have but
may need to manage risk or respond to
a crisis and take action to seek those
additional legal authorities or tools .
•
Develop Communication Plans and
Options . A checklist of potential
internal and external communication
actions for leadership to consider in
response to a crisis can be included in
the plan . Communication both during
and after the crisis event is integral
to a crisis response . The checklist can
include options for: (1) developing and
implementing a communications strategy
to promote transparency (i .e ., statements
by the agency head, Frequently Asked
Questions, webcasts, interviews, links
to temporary relief, exemptive orders,
and staff guidance); (2) creating
communication templates or leveraging
existing communication templates; and
(3) identifying potential communication
media – for example creating or using
existing public-facing websites, creating
call centers, and preparing training
materials and/or a library of program
response materials .

9
Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
Guidance in Preparing for and Managing Crises

•  Prioritize System Capacity, and Cyber
and Information Security (Aligned
with Existing Continuity Capabilities)
Crisis readiness plans can also include
an evaluation of mission critical systems
and equipment to assess the agency’s
ability to handle a crisis . An effective
information security program that meets
federal standards includes an incident
response plan that establishes procedures
for staff to follow during cyber incidents .
The information security response plan
documents the triggers, procedures, roles
and responsibilities, including forming
an incident assessment group, and
resources for eradicating and/or limiting
the expansion of an information security
incident and minimizing its effects .
The incident response plan includes an
incident recovery plan that identifies
individuals responsible for initiating the
recovery plan, defines criteria that must
be met to return compromised services
and technology to the network, and
explains how to document the decisions
and actions taken for future reference . The
incident response plan also addresses how
to coordinate communication with internal
and external stakeholders about response
and restoration activities . These plans
and options are aligned with agencies’
business continuity plans and encompass
forecasting budget and staffing resources
to address crisis response activities
prospectively before a crisis occurs .
•  Provide for Testing, Evaluation, Review,
Revision, and Training . Crisis readiness
plans can also include a process to review,
test, and revise crisis readiness plans on
a recurring basis .21 Training can ensure
that agency personnel have the requisite
knowledge, skills, and abilities to execute
the crisis management tasks . Training
can explain the delegations of authority
and options for potential actions . It
is important that an agency establish
feedback mechanisms to assess the
lessons learned from training, simulation
exercises, and actions undertaken during
an actual crisis event to systematically
incorporate improvements into the
crisis readiness plans . Periodic reviews
and readiness plan updates can also
reflect any changes in the operational
environment, system resources, leadership
structure, and the evolution of industry
standards, laws, and regulations .
•  Provide for Reporting . Plans can also
provide a mechanism to regularly report
to key decision makers about the agency’s
crisis readiness .
Agencies’ Crisis Management
Crisis planning and crisis management
work in tandem . Once agency leadership
determines that a crisis exists, senior agency
leaders consult and modify, as needed, the
crisis readiness plans developed during the
21 For example, agencies can conduct exercises of the crisis readiness plan under different emergency scenarios . These periodic
exercises, usually occurring at least annually, are followed by an after-action review to capture observations and identify areas for
improvement .

Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
10

Guidance in Preparing for and Managing Crises
pre-crisis planning period . These actions
equip FSOC member agency leaders to
create the crisis management strategy .
The crisis management strategy dictates
the response to a crisis . Key elements
that contribute to effectively managing a
crisis include clear leadership response,
coordination, communication, resource
assessments, supervisory activities, and
implementation of response or rescue
programs .
•  Implement Leadership Response.
Consistent with the roles and
responsibilities outlined in their crisis
readiness plans, agencies deploy a
leadership response in which strategic
decision-making and coordination occur
at the senior agency level, and operational
and tactical authorities remain within
appropriate business areas to ensure
efficient management of incidents . The
senior crisis management team can
serve to provide strategic leadership,
set response priorities, inform and/or
consult with key governance bodies, and
escalate policy issues as appropriate .
Meanwhile, a crisis communication team
may coordinate with crisis leadership and
support consistent, timely, and effective
communication with stakeholders .
•  Coordinate Among Member Agencies . For
specific crises, using pre-existing working
groups or establishing interagency
working groups and sub-working groups
fosters the exchange of ideas, and helps to
facilitate decision-making and determine
plans for action and communications .
Working groups can assist leadership by
providing crisis support and helping to
facilitate the crisis management process,
gather status updates, develop situation
reports, facilitate an understanding of
business functional and operational
impacts across the organization, gather
information from external subject matter
experts and government authorities,
and provide situational awareness .
The working group, or sub-working
group, also can include a team to
review available data, assumptions, and
methodologies in use and recommend a
consistent analytical framework across
agencies . Standardizing data is critical
to the agencies’ collective analysis of the
economic and financial impacts of the
crisis, including the effects of the policy
actions taken in response to the crisis .
•  Communicate to Internal and External
Stakeholders . Publicly communicating
individual agency’s responses to the
crisis promotes transparency . Public
communications provide insight into each
agency’s efforts and how it is continuing
to fulfill its mission . Agencies consider
the options for communicating to agency
employees, regulated entities, and the
public . Internally, agencies may consider
interdivisional instructions for team
notifications in the event deployments
become necessary on short notice .
Internal communication provides updated
information relevant to employees via
direct communication and/or a webpage .
Communications are coordinated with
crisis leadership, as previously noted .

11
Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
Guidance in Preparing for and Managing Crises

External communication provides for
statements by agency leaders, interviews,
guidance, websites, and call centers
as potential communication channels .
In addition, interagency guidance and
interagency statements can be effective
tools to clarify a supervisory approach and
convey that message clearly to institutions
and markets .
•  Assess Resources. Managing surge
staffing by onboarding new employees at
a pace that aligns with the crisis demands
on workforce capacities is essential . Senior
leaders responsible for crisis management
consider the need to meet both budget
and staffing increases, commensurate
with crisis demands . Understanding the
possible options available in advance can
help to expedite the potentially large-
scale hiring and onboarding of new staff
to address crisis response activities, such
as administering response programs
or responding to institutional failures .
Leaders use flexible hiring and staffing
approaches, as presented in the crisis
planning phase . This may also necessitate
flexible hiring and contracting processes
during crisis management . Pay, benefit,
and interim work schedule flexibilities, for
example, can be useful in expediting the
hiring process during a crisis . As a part of
the resource assessment, if changes to the
workforce occur as a result of the crisis,
like it did during the COVID-19 pandemic,
it is important to design training that
could be quickly transitioned to virtual
sessions and to provide remote access
to all employees . Supporting a remote
workforce required agencies to provide
technical guidance to assist in securely
connecting to agency systems . Future
crises may present different challenges
requiring agencies to assess additional
support alternatives for their workforce .
•  Supervise Markets and Regulated
Entities. Coordinating and prioritizing
supervisory activities on those markets
and entities that pose the greatest
risk is critical .22 Adapting supervisory
approaches, such as: (1) focusing on
monitoring and outreach to help financial
institutions and market participants
understand the challenges and risks of the
environment, and (2) allowing temporary
changes to examination activities to
minimize disruptions . Such changes might
include granting additional time to resolve
existing noncritical supervisory findings .
During a crisis, agencies can communicate
with other federal and state regulators to
avoid duplicative efforts and to coordinate
efforts in executing revised supervisory
approaches . Notably, large interconnected
financial institutions often require
heightened supervisory attention due to
the greater complexity of their operations
and the outsized risks that they can pose
to the U .S . economy .
22 To accomplish the goal of focusing supervisory activity on those markets and entities that pose the greatest risk, an agency
conducting prioritized assessments ranks the risks under its jurisdiction and analyzes staff capacity to prioritize how to deploy
limited resources . Another goal of this approach is to increase the efficiency and effectiveness of information flow collected by
the agencies related to operational changes and regulatory challenges, and to coordinate with other federal and state regulatory
agencies .

Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
12

Guidance in Preparing for and Managing Crises
•  Deploy Response Programs. Response
programs typically involve government
investments, loans, guarantees, or
repayment modifications, and are
designed to address the unique
circumstances of a particular crisis .
Programs should be transparent, and
decisions relating to them should be
documented to ensure that the process
is clear and understandable, and that
there is an appropriate level of oversight .
Having specific, measurable goals for
federal rescue programs, and aligning
funding accordingly, is necessary .
Effective program design clearly identifies
the metrics by which success will be
measured and how management will
monitor and report the agency’s progress
in meeting these goals . In managing the
program, agency managers also monitor
the program’s activities, which ensures
that funds are used as intended . Regular
assessments and communication, to
include the exit path and end date for
response programs, are also useful .
•  Evaluate Lessons Learned. Following a
crisis and return to steady state, initiating
after-action reviews to examine the
cause(s) for any implementation issues,
analyzing the effectiveness of the agency’s
crisis management process, identifying
opportunities for improvement, and acting
on those opportunities for improvement
is helpful . It is important that agencies
coordinate these efforts and collaborate
to produce post-event analyses and
reports . Based on the observations in the
after-action reviews, agency leadership
should consider initiating improvement
planning . Improvements should consider
the applicability to all crisis readiness
plans, not just to the hazards and crisis
plans utilized during the preceding crisis .
Conclusion
The foregoing guidance is intended to
assist FSOC and its member agencies in
coordinating, sharing information, and
planning for future crises . For FSOC,
this guidance can be used to collect and
disseminate crisis readiness information to
member agencies as well as to assist with
assessing the risks to the United States’
financial stability associated with agencies’
crisis readiness preparedness . For member
agencies, this guidance can be used to assist
with planning for future crises . The crisis
preparedness and management practices
identified and summarized in this guidance
as well as the crisis preparedness actions
previously recommended by the IMF and
GAO can inform FSOC and its member
agencies and help to preserve the financial
stability of our nation during future crises .
On March 23, 2022, FSOC provided a written
response to this guidance document .23
FSOC’s response is included as Appendix II .
23 Prior to issuance of this report, CIGFO and FSOC engaged in pre-decisional discussions to ensure a full understanding of the
report’s guidance before CIGFO received FSOC’s final management response .

13
Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
APPENDIX I
APPENDIX I
Abbreviations
Act/Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
COVID-19
Coronavirus Disease 2019
CFPB
Consumer Financial Protection Bureau
CFTC
Commodity Futures Trading Commission
CIGFO
Council of Inspectors General on Financial Oversight
FDIC
Federal Deposit Insurance Corporation
FHFA
Federal Housing Finance Agency
FIO
Federal Insurance Office
FRB
Board of Governors of the Federal Reserve System
FSOC
Financial Stability Oversight Council
GAO
U .S . Government Accountability Office
HUD
U .S . Department of Housing and Urban Development
IG
Inspector General
IMF
International Monetary Fund
NCUA
National Credit Union Administration
OCC
Office of the Comptroller of the Currency
OFR
Office of Financial Research
OIG
Office of Inspector General
SEC
U .S . Securities and Exchange Commission
SIGTARP
Special Inspector General for the Troubled Asset Relief Program
Treasury
Department of the Treasury

Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
14

APPENDIX II
APPENDIX II

Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises

APPENDIX III
APPENDIX III
SOURCES USED BY THE CIGFO WORKING GROUP
TO DEVELOP GUIDANCE
COLLABORATION AND PRE-CRISIS PLANNING ACTIVITIES
Commodity Futures Trading Commission . (2020, October 20) . CFTC and BoE Sign New MOU
for Supervision of Cross-Border Clearing Organizations [Press Release 8289-20] . https://
www .cftc .gov/PressRoom/PressReleases/8289-20
Commodity Futures Trading Commission . (2019, February 25) . Joint Statement by UK and US
Authorities on Continuity of Derivatives Trading and Clearing Post-Brexit [Press Release
7876-19] . https://www .cftc .gov/PressRoom/PressReleases/7876-19
Commodity Futures Trading Commission . (2020) .
 . (hereinafter “
”)
Department of the Treasury Office of Inspector General . (2013) . Safety and Soundness: OCC
Identification of Emerging Risks https://oig .treasury .gov/sites/oig/files/Audit Reports
and Testimonies/OIG13037 .pdf
Federal Deposit Insurance Corporation . (2012) . Effectively Managing FDIC’s Resources –
Meeting the Challenges of the Financial Crisis, 2008-2011 . (hereinafter “FDIC, Managing
FDIC’s Resources”)
Federal Housing Finance Agency . (2019) . AB 2019-01 Business Resiliency Management
https://www .fhfa .gov/SupervisionRegulation/AdvisoryBulletins/Pages/Business-Resiliency-
Management .aspx
16

Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises

APPENDIX III
Federal Housing Finance Agency . (2018) . AB 2018-07 Federal Home Loan Bank Liquidity
Guidance https://www .fhfa .gov/SupervisionRegulation/AdvisoryBulletins/Pages/Federal­
Home-Loan-Bank-Liquidity-Guidance .aspx
Federal Housing Finance Agency . (2013) . AB 2013-01 Contingency Planning for High-
Risk or High-Volume Counterparties https://www .fhfa .gov/SupervisionRegulation/
AdvisoryBulletins/Pages/AB-2013-01-CONTINGENCY-PLANNING-FOR-HIGH-RISK-OR­
HIGH-VOLUME-COUNTERPARTIES .aspx
Financial Stability Oversight Council . (2020) . 2020 Annual Report https://home .treasury .gov/
system/files/261/FSOC2020AnnualReport .pdf
Office of the Comptroller of the Currency . (2013) . An International Review of OCC’s
Supervision of Large and Midsize Institutions https://www .occ .gov/news-issuances/news­
releases/2013/nr-occ-2013-184a .pdf
Office of the Special Inspector General for the Troubled Asset Relief Program . (2014) . What
Makes a Bank Systemically Important?, Written Testimony of Christy L . Romero before
the U .S . Senate Committee on Banking, Housing, and Urban Affairs Subcommittee on
Financial Institutions and Consumer Protection . https://www .sigtarp .gov/sites/sigtarp/files/
Testimony/SIGTARP testimony TBTF and SIFI regulation July 16 2014 .pdf
CRISIS READINESS PLAN ELEMENTS
Board of Governors of the Federal Reserve System (2020) .
(hereinafter “
”)
Board of Governors of the Federal Reserve System (2019) .
 .
(hereinafter “
”)
Board of Governors of the Federal Reserve System (2018) .

supra
FDIC, Managing FDIC’s Resources, supra
Federal Deposit Insurance Corporation . (2020) . FDIC Chairman Letter to Representative
Maxine Waters . (hereinafter “FDIC Chairman Letter”)
17

Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises

APPENDIX III
Federal Deposit Insurance Corporation . (2018) . Atlanta Region Critical Event Management Plan.
Federal Deposit Insurance Corporation Office of Inspector General . (2020) . The FDIC’s
Readiness for Crises [EVAL-20-004] https://www .fdicoig .gov/sites/default/files/
publications/EVAL-20-004 .pdf
Federal Housing Finance Agency . (2017) . AB 2017-02 Information Security Management
https://www .fhfa .gov/SupervisionRegulation/AdvisoryBulletins/Pages/Information­
Security-Management .aspx
Federal Housing Finance Agency . (2018) . AB 2018-06 Liquidity Risk Management https://
www .fhfa .gov/SupervisionRegulation/AdvisoryBulletins/Pages/Liquidity-Risk-Management .
aspx
National Credit Union Administration . (2020) .
. (hereinafter “
”)
U .S . Securities and Exchange Commission (2020) .
 . (hereinafter “
”)
U .S . Securities and Exchange Commission (2020) .
 .
U .S . Securities and Exchange Commission . (2020) SEC Coronavirus (COVID-19) Response
https://www .sec .gov/sec-coronavirus-covid-19-response (hereinafter “SEC COVID
Response”)
U .S . Securities and Exchange Commission . (2018) . U.S. Securities and Exchange Commission
Strategic Plan Fiscal Years 2018-2022 https://www .sec .gov/files/SEC Strategic Plan
FY18-FY22 FINAL .pdf
CRISIS MANAGEMENT
Consumer Financial Protection Bureau . (2020) .
 .
FDIC Chairman Letter, supra
FDIC, Managing FDIC’s Resources, supra
18

19
Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises

APPENDIX III
Federal Deposit Insurance Corporation . (2017) . Crisis and Response, An FDIC History, 2008­
2013 https://www .fdic .gov/bank/historical/crisis/
Federal Deposit Insurance Corporation . (2017) . Draft Debt Ceiling Contingency Planning
Summaries
Federal Housing Finance Agency . (2020) . (FNM-DER-2020-023) (FRE-DER-2020-027)
Operational Risks Associated with Coronavirus Disease 2019 (COVID-19)
FRB 2020
, supra
supra
NCUA
, supra
Office of the Special Inspector General for the Troubled Asset Relief Program . (2012) . Factors
Affecting Implementation of the Hardest Hit Fund Program [SIGTARP 12-002] https://
www .sigtarp .gov/sites/sigtarp/files/Audit Reports/SIGTARP HHF Audit .pdf
Office of the Special Inspector General for the Troubled Asset Relief Program . (2009) . Initial
Report to the Congress https://www .sigtarp .gov/sites/sigtarp/files/Quarterly Reports/
SIGTARP Initial Report to the Congress .pdf
Office of the Special Inspector General for the Troubled Asset Relief Program . (2011) . Legal
Fees Paid Under the Troubled Asset Relief Program: An Expanded Report [SIGTARP 11­
004] https://www .sigtarp .gov/sites/sigtarp/files/Audit Reports/G%2009%20OFS%20
Contracting%20Final%2011-004%2009-28-2011 .pdf
Office of the Special Inspector General for the Troubled Asset Relief Program . (2011) . Quarterly
Report to Congress https://www .sigtarp .gov/sites/sigtarp/files/Quarterly Reports/
October2011 Quarterly Reportto Congress .pdf
SEC COVID Response, supra
SEC
supra
U .S . Securities and Exchange Commission (2020) .
[
] .

APPENDIX IV
APPENDIX IV
CIGFO Working Group
Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
Federal Deposit Insurance Corporation Office of Inspector General, Co-Lead
Jay Lerner, Inspector General, Federal Deposit Insurance Corporation
Terry Gibson
Cynthia Hogue
Stacey Luck
Rigene Mabry
Michael Reed
Special Inspector General for the Troubled Asset Relief Program, Co-Lead
Melissa Bruce, Acting Special Inspector General, Troubled Asset Relief Program
Jenniffer Wilson
Marc Geller
Jennifer Kim
James Lloyd
Gabriele Tonsil
Department of the Treasury Office of Inspector General
Richard Delmar, Deputy Inspector General, Department of the Treasury and Acting CIGFO Chair
Deborah Harker
Susan Barron
Jeffrey Hawkins
Andrew Morgan
Tayla Haughton
Kajuana Britt
Katherine Draper
Sheila Arguello
Timothy Cargill
Jackquelynne Foley
Department of Housing and Urban Development, Office of Inspector General
Rae Oliver Davis, Inspector General, Department of Housing and Urban Development
Lisa Sweeney
 Greg Soames
Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau Office of
Inspector General
Mark Bialek, Inspector General, Board of Governors of the Federal Reserve System and Consumer Financial
Protection Bureau
Michael VanHuysen
Jason Derr
Laura Shakarji
Margaret An
Matt Gibbons
Federal Housing Finance Agency Office of Inspector General
Brian Tomney, Inspector General, Federal Housing Finance Agency
Marla Freedman
Robert Taylor
James Lisle
April Ellison
Michael Rivera
National Credit Union Administration Office of Inspector General
James Hagen, Inspector General, National Credit Union Administration
Marvin Stith
U.S. Securities and Exchange Commission Office of Inspector General
Carl Hoecker, Inspector General, U.S. Securities and Exchange Commission
Rebecca Sharek
Kelli Brown-Barnes
Douglas Carney
Lucia Fuentes Bermudez
U.S. Commodity Futures Trading Commission Office of Inspector General
A. Roy Lavik, Inspector General, U.S. Commodity Futures Trading Commission

21
Council of Inspectors General on Financial Oversight • Guidance in Preparing for and Managing Crises
This page is intentionally blank

File and source

File

2022-06-cigfo-working-group-guidance-preparing-managing-crises.pdf

Size

1,578,563 bytes

SHA-256

8896b2da8b1ad8034dce5f9a64ceddfe9a4f588f3788c10f8573afa06906dc11

Our copy

2022-06-cigfo-working-group-guidance-preparing-managing-crises.pdf

Original

oig.treasury.gov