Small Business Committee Examines SBA Disaster Assistance Programs

Washington, Nov 30. WASHINGTON, D.C.— House Small Business Committee Chairman Sam Graves (R-MO) today held a full committee hearing to examine the Small Business Administration’s (SBA) programs that provide long-term disaster recovery assistance. The hearing focused on the SBA’s implementation of the Small Business Disaster Response and Loan Improvements Act of 2008, designed to improve disaster planning following the abundance of major storms in 2005.

The Committee received testimony from SBA Associate Administrator of the Office of Disaster Assistance James Rivera and the United States Government Accountability Office (GAO) Director of Financial Markets and Community Investment William Shear.

“Disasters can happen at any time. And so we must be prepared to respond at a moment’s notice to meet the needs of disaster victims. Major disasters in our recent past have taught us many valuable lessons; one of those is that the SBA must be better equipped to process loan applications instead of burdening victims with endless paperwork, misinformation and delays. 

“It is extremely troubling that six years after the myriad of major storms, such as Katrina, and three years since the Small Business Disaster Response and Loan Improvements Act was made law, the GAO continues to report that statutes have not been fully implemented. While progress has been made, the SBA’s disaster program needs to be a priority with this administration. In the event of a catastrophe, there are thousands of Americans who rely on the SBA for assistance to rebuild their homes and their businesses. We must ensure our i’s are dotted and t’s crossed, so we are able to competently respond at any time.” 

For additional hearing information, click here.

Notable Witness Quotes:

William Shear, Director of Financial Markets and Community Investment at the GAO in Washington, DC, said, “As of November 2011, SBA met requirements for 16 out of 26 provisions of the Act and partially addressed six… However, to fully address statutory requirements the agency must make extensive changes to current programs or implement new programs.”e

Operational Risk Management and Business Continuity Planning for Modern State Treasuries

Management of financial risk is very important for the treasury operations of any ministry of finance. Ministry of finance bears responsibility for the management of very substantial government assets and liabilities, and for the management of many large value transactions, probably much more than any other government ministry or agency.

The large sums involved mean that any risk exposure can have damaging financial consequences on the budget outturn and the overall government balance sheet. But there is potentially also severe reputational and political damage associated with operational errors or failures, reflecting on the competence of the ministry of finance covering treasury operations.

Ministry of finance is potentially exposed to—and will have a particular appetite for exposure to—a wide range of risks. Figure 1 illustrates the perceived risks:

• financial risks: traditionally managed by a risk management unit located in the ministry of finance that includes market, liquidity, and credit risks

• business risks: such as new legislation, change of government, macro-economic performance and any other factors affecting the ministry of finance’s environment—these are often managed as part of the budget planning process.

• operational risks: a range of threats from loss of key personnel, settlement failure, and compliance failure, to theft, systems failure and building damage—operational risk management aims to ensure the integrity and quality of the operations of ministry of finance and treasury using a variety of tools including audit, recruitment policies, system  controls, and business continuity planning.

Awareness of operational risk is low in many countries, and very few ministries of finance have a business continuity and disaster recovery plan (BCP/DRP). Often it is perceived as something applicable only to the private sector and attracts little attention by senior management.

This is because it is not seen as important or a priority, there are inadequate resources allocated to establish and maintain an operational risk management (ORM) framework including BCP/DRP, responsibility is delegated to information technology, and it becomes a one-off project rather than an integral part of the day-to-day treasury operations. Management neglect is often at fault with the belief that “it won’t happen to me”.

Ian Storkey. Fiscal Affairs Department INTerNATIoNAl MoNeTAry FUND. Prepared by Ian Storkey Authorized for distribution by Sanjeev Gupta November 2011.

Operational Risk Management and Business Continuity Planning for Modern State Treasuries