The Role of Board Members and Executives in FDICIA Compliance

While mandatory, Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) compliance presents an opportunity for banks to strengthen their governance and risk management frameworks. For board members and executives, the challenge lies not in meeting the basic regulatory requirements but in strategically integrating FDICIA objectives and controls into broader business objectives. Effective leadership ensures that FDICIA controls become a proactive tool for mitigating risks, driving operational efficiencies and fostering transparency. By remaining engaged in the FDICIA compliance process, boards and executives can elevate their roles through governance, oversight and innovative practices, making FDICIA compliance a catalyst for sustainable business growth.

Oversight That Sets the Tone

One of the most important pillars of modern business is a strong culture; the performance of the business and its employees often correlates with the state of its culture. When considering FDICIA compliance, aligning with strategic efforts and company values is a crucial first step in ensuring you not only achieve compliance but maintain it as well. By promoting ethical behavior and accountability, executives are creating the foundation for a business identity rooted in regulatory compliance and adaptable business practices. Executives and board members who work to establish this cultural identity not only ensure that they are avoiding penalties and reputational damages by falling out of line with regulations but also that they are building a framework for continued business growth.

Strategic Alignment

FDICIA compliance is a complex process — one that requires business leaders to collaborate in creating a robust strategy to achieve and maintain compliance. There are several strategic elements to consider when building strategies for compliance efforts.

• Business Strategy: Prioritizing compliance efforts in every aspect of your business operations can help you achieve compliance and establish a compliant culture.
• Control Strategy: When determining internal controls, it is important to consider the control types that will help you achieve your compliance goals. By integrating compliance strategy into operations such as segregation of duties, access controls, automated reporting and reconciliation controls, you are helping establish a framework of controls for continued compliance.
• Risk Management: Impediments such as inaccurate financial reporting, weak internal controls, vendor risk and management oversight are examples of the risks that banks encounter in their FDICIA compliance efforts. Banks that establish an appetite for risk and integrate procedures such as regular reviews and audits of processes and controls, increased review from board members and executives and strategic management for vendor risk all work to ensure the risks associated with compliance remain at a minimum for your bank.

Training, Education & Attestation

Executives and board members who highly prioritize FDICIA should invest in resources such as innovative software and technology and continued education to align with compliance best practices. While these two investments operate separately at times, it is important that employees and executives are educated on the practices and procedures associated with any technology they may need for their operational duties.

There are many helpful resources for executives who wish to take on a more involved role in the compliance process, such as technology for real-time control testing, financial reporting and automated dashboards that track key performance indicators (KPI) while offering safeguards to reduce errors and mitigate operational and compliance risks. Utilizing these tools can assist with attestation requirements such as board and executive certification of financial reports, offering an additional layer of review. Educational efforts for this technology can come in the form of one-on-one training or workshops with third-party training staff who specialize in system implementation, thereby staying informed of the best strategies and practices for FDICIA compliance while increasing employee skill sets.

With a commitment to supporting executives and board members, CBIZ offers comprehensive assistance in navigating the compliance process, reducing risks and developing strategies to uphold FDICIA compliance. Connect with us today to learn more.