report on performance metrics for operational ... - exim · osvaldo l. gratacós, inspector general...

OF

FI C

E O

F I N S P E C T O R GE

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OFFICE OF INSPECTOR GENERALEXPORT-IMPORT BANK

of the UNITED STATES

REPORT ON PERFORMANCE METRICS

FOR OPERATIONAL EFFICIENCY

PHASE ONE

March 27, 2012OIG-INS-12-01

To: FredP.Hochberg,President&Chairmantin Officer

From:

r iefOpera

AliceAlbright,ExecutiveVice P esidentandCh g

OsvaldoL.Gratacós,InspectorGeneral

Subject:EfficOIGReportonEx‐ImBank

iency(PhaseO

’sPerformanceMetricsforOp

erational

Date: March27,2012

ne),OIG‐ING‐12‐01

IampleasedtoprovidOfficeofInspectorGeneral(OIG

eyouwith)onEx‐ImBank’sPerformanceM acopyofthefinalevaluationr eportissuedby

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March27,2012.OperationalEfficiency(PhaseOne), dated

Wefoundthat:

ReportNo.OIG‐INS‐12‐01,

Ex‐ImBanklacksasystematica

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customerfeedbackonitsperformsatisfaction;

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(202)565‐3908.

Attachment

Ccw/Attachment:RaviArulanantham,SeniorVice‐President,Strategy

811 VermontAvenue,NW Washington,D.C.20571

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Gratacos Signature

TABLE OF CONTENTS

ExecutiveSummary.............................................

.................................................

........................................................................2

I. ............................................................................

Background 5

ECAFocusonOperationalPerformance

.....................................................................6

PerformanceMetrics...........................................

................................................................6

II.

ExecutiveOrderonImprovingCustomerService...................................................7

EvaluationObjectives..........................................................................................................7

III. FindingsandRecommendations

.....................................

....................................................................................8

IV. ScopeandMethodology ..............................................................

17

AppendixA–ECASurveyResu

Efficiency ....................................................ltsonPerformanceMetricsforOperational

...................................................................................18

AppendixB–AverageDaystoDecisionMonthlyAverages.....................................29

AppendixC–ProductVolumes.............................................................................................31

AppendixD–ManagementResponse................................................................................32

Acknowledgements....................................................................................................................33

EXECUTIVE SUMMARY

AspartofitsbroadermissiontoevaluateExport‐ImportBank(Ex‐ImBank)performance,policies,andprocedures,theOfficeofInspectorGeneral(OIG) conductedanevaluationofEx‐ImBank’sperformancemetric policies,withaparticularfocusontransaction responsetimeandthe measurementofcustomersatisfaction.Performance metricsallowmanagementtotrack progresstowarditsobjectivesina transparent manner.Inaddition,theyprovideinsightfuldatathatcanbeutilizedforavariety ofpurposes:toinformresourcealignment,highlightpotentialproblemsandtakecorrectiveaction,developstrategy,andtoincentivizeperformance.

Theimpetusforconductingthis evaluationwastwo‐fold.First,Ex‐ImBank’saccelerated growthduringthepast fouryears resultedin thegrowingperceptionamongcertainstakeholdersthattransactionsmaybetakinglongertoprocess andapprove.Second,giventhisobservation, theEx‐ImBankOIGisinterested inbenchmarkingEx‐ImBank’sperformanceagainstExportCredit Agency(ECA)bestpracticesrelatedtooperationalefficiencyandcustomerservice.

Theevaluationconsists oftwophases.Phase One entails a reviewofEx‐ImBank’smetrics foroperationalefficiency andacomparisonof thosemetrics withotherECApractices basedonanOIGsurveyoftwelve ECAs(ECASurvey).PhaseTwo consistsofanEx‐ImBankcustomersatisfaction surveyto beconductedbyOIGEx‐ImBank commencinginApril,2012.The customersurveywillprovidevaluablefeedbackoncustomerprioritiesandEx‐ImBank’sperceivedperformance.

DataforthePhaseOneevaluation aredrawn fromfourprincipal sources:(i)areviewofEx‐ImBankinternalreportingsystemsandrelatedmanagementreports;(ii)interviewswithEx‐ImBankstaff; (iii)interviewswitha selectgroupof ECApeers;and(iv)abroadersurveyofECAsonperformancemetrics administeredby Ex‐ImBankOIG.ThesurveytargetedECApeers and addressed theselectionandmeasurement of performance metricsforoperationalefficiency,recentlyintroducedinitiatives to improvecustomerservice,andhowinstitutionsbalancecompetingagendas oftimelycustomerresponsewith theneedtocompletesatisfactorytransactionduediligence.

OurECASurveyshowedthatperformancemetricsforcustomerserviceoftenfocus ontransaction response time,availabilityand knowledgelevelof staff,informationrequirementsforapplications, and customerrelationshipmanagementsystems.Infact,accordingto ourECAsurvey,transactionresponsetimeis thesinglelargestdeterminantof customersatisfaction. Therefore, wehavemadeit a focusofthisevaluation.

Althoughourevaluationcompares Ex‐ImBank’soperationalefficiencymetricswiththoseofotherECAs,wearemindfulthatothercountrieshave differentECAbusiness modelsrangingfrom lendersoflastresorttoquasi‐marketplayersto industrialpolicyinstitutions. Moreover, theoperationalobjectives,risk appetites,pricingand financialdriversassociated witheachofthesemodelsmaydiffer.Asa result, theseECAsmayvaryfrom

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Ex‐ImBankinvariousdegreesincludinggovernmentalobjectives,institutional priorities, budgetlevelsandstaff resources.1

Nevertheless,inourview,benchmarkingEx‐ImBankwithitspeers provides insightsonbestpracticesin thecompetitiveECAsector. Manyofthesebestpracticesderivefromtwooverarchingthemes:theuseofa balancedscorecardapproachtoperformancemeasurementincorporatingbothquantitative andqualitativemetrics;andtheuseofcustomerfeedbacktoinformresourceallocation,customerservicelevels,andperformancemeasurement.

Duringthis PhaseOne evaluation,wefoundthatEx‐ImBanklacksasystematicapproachtosolicitingandmeasuringcustomerfeedbackonitsperformanceandtheoveralllevelof customersatisfaction. Indeed, Ex‐ImBankhasnotconducteda comprehensivecustomersurveysince2004.Solicitingcustomerfeedbackina timelyandsystematicmannerprovidesvaluableinsightastocustomerpriorities,perceived performance, areasfor improvement,and informsfutureresourceallocation.

OurECAsurveyshowsthatother ECAsareproactiveandsurveytheir clientson a regularandsystematicbasis. President Obamahasrecently emphasized suchcustomerservicefocusbyissuingExecutiveOrder 13571,which requiresfederal agencies(andrequestsindependentagencies) todevelop customerserviceplansandstandardsthat implementbestpracticesfromthe privatesector.

WealsofoundthatEx‐ImBankhas notpublishedcomprehensiveperformanceobjectives,standardsforacceptableperformance,andmetricstomeasureprogressasrequiredbytheGovernmentPerformanceandResultsActof1993.OursurveyshowsthatotherECAshaveimplementedandpublishedagency‐wideperformancemetrics that addressboth quantitative andqualitative factors.Inaddition,wefoundthatEx‐ImBankcurrently measuresits operating efficiencyinlargelyquantitativeterms‐‐citingthevolumeofexports financed,number of jobssupported,andrevenuesperemployee‐‐butdoesnot addressimportantqualitative issuessuchas thelevelofcustomersatisfaction.

Finally,wefoundthatalthoughEx‐ImBankhasmadesubstantial progressinimprovingtransaction responses within the SmallBusinessGroupandshort termproducts,greater focusshouldbeplacedonthetrackingandmanagementof thetransactionresponsetimesinthelong‐termcreditprograms.AlthoughthepreponderantshareofEx‐ImBankcustomersreside withintheshort termcredit programsandSmallBusinessGroup,long‐termcreditprogramsaccountforovereightypercentofEx‐ImBank’stotaloutstandingportfolio.

WemadeseveralrecommendationstoimproveEx‐ImBank’soperationalefficiencyandcustomerservice tobringEx‐Im BankinlinewithECAbestpractices.Ingeneral,we

1 Formore information ondifferencesbetweenEx‐ImBankandotherG‐7 ECAs,seeU.S.GovernmentAccountabilityOffice,February2012, U.S. Export‐Import Bank: Actions Needed to Promote Competitiveness and International Cooperation,GAO‐12‐294, http://www.gao.gov/products/GAO-12-294.pdf.

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http://www.gao.gov/products/GAO-12-294

recommendthatEx‐ImBankdevelop asystematicapproachtodefining andmeasuringcustomersatisfaction, suchasanannualcustomersurvey anda customerserviceplan,andparticipate indialoguewithother ECAsoncustomerservicebestpractices.In addition,werecommendthatEx‐ImBankdevelop,implement,andpublicizeconsistentperformancestandardsandmetricsthroughout theagencyandactivelymonitorperformance inaccordance withtheGPRAModernization Actof2010.

WealsorecommendthatEx‐ImBank managementimplementabalancedscore cardapproachandincorporatebothquantitative andqualitativemetrics.Finally,we recommendthatEx‐ImBanksolicit customerinputonitsoperationalperformance,revisititsmetrics andcustomerservicelevelstoreflectcustomerexpectations,andimplementappropriateresponse targets forlong‐termcredits.

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I. BACKGROUND Ex‐ImBankistheofficialexport‐creditagency(ECA)oftheUnitedStates.ItsmissionistosupportthefinancingofU.S.goods andservicesininternationalmarkets,thuspromotingjobcreation inthe UnitedStates.Ex‐ImBankaccomplishes thistaskbyassuming thecredit andcountryrisksthat privatesectorfinancialinstitutions areunableorunwillingtoaccept.Concurrentwiththismission,Ex‐ImBankmustsafeguardtaxpayer resourcesbyensuring areasonableassuranceof repayment.Ex‐ImBank’sprincipalprogramsareloanguarantees,directloans,exportcreditinsurance,andworkingcapital guarantees. Asafederalagency,Ex‐ImBank’sprogramsarebacked bythefullfaithandcreditofthe U.S.government.

Overthelastfiveyears,Ex‐Im Bankhaswitnessedasubstantialincreaseinnew businesswithtotalnewauthorizationsamountingto$32.7billionforFY 2011.2 Inaddition,thelevelofemployeeefficiency– the averagedollaramountofauthorizationsperemployee–hasmorethandoubledwhilethe numberofauthorizationsperemployeeincreasedfrom6to10duringthesameperiod.Concurrentwiththisgrowth,Ex‐ImBankhassuccessfullyimplementedmeasurestoenhance itsresponsetimeperformanceintheSmallBusinessGroupandshortterm products.Asaresult,responsetimeperformanceinthe SmallBusinessGroupandshort‐termproductsshowedaconsistentimprovement in2010and2011.

Notwithstanding thisprogress,responsetime performance in the long‐termstructuredportfoliohasbeenmixedasEx‐ImBankstaffandITbudgetshavenotkeptpacewiththegrowthin newbusiness.Indeed, thenumberoflongtermguaranteesandloansprocessedinFY2011 rosealmost25%over 2010levels withoutacorrespondingincrease instafforITbudgets.Asaresult,certainEx‐ImBankstakeholdershave expressedconcerns abouttheapprovaltimesand process. Forexample,DonnaAlexander, Presidentof theBankers’Association forFinanceandTrade andtheInternationalFinancialServices Association(BAFT‐IFSA),testifiedinCongresslastyearthatEx‐ImBank“programprocessinginefficienciesaregenerallymanifestedbyinordinatelylong processing timesfor transactions andultimatelycancompromisesomedeals.Thisis particularlytrueofsome smallbusinesstransactions,wherethecostsrelatedtolengthy processingperiodscan causedifficultiesincompletingtransactions.”3 Ex‐ImBankOIGalsocontinuestoreceiveanecdotalevidencefromstakeholdersthat internalprocessinginefficienciesare resultinginlongerprocessing timesforcertaintransactions.

InFY2010, Ex‐ImBankbeganimplementing itsStrategic Planreinforcingitsabilitytoaccomplishitsmission, serve a prominentroleintheNational ExportInitiative4,andmeet

2 Ex‐Im Bank Authorizes $3.4 Billion in Financing at Fiscal Year‐End Supporting Over 20,000 U.S. Jobs,September 30, 2011,Ex‐ImBankPressRelease, http://www.exim.gov/pressrelease.cfm/5BFB12B0‐CCF4‐B6E4‐0546FC19AA3BE72D/

3 Ms.Alexander’stestimony canbefoundat http://financialservices.house.gov/uploadedfiles/052411alexander.pdf.

4 PresidentObamaannounced the NationalExportInitiative inhis2010StateoftheUnionAddress andset thegoalofdoublingU.S. exportsbytheendof2014.

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http://financialservices.house.gov/uploadedfiles/052411alexander.pdf

http://www.exim.gov/pressrelease.cfm/5BFB12B0-CCF4-B6E4-0546FC19AA3BE72D/

http://www.exim.gov/pressrelease.cfm/5BFB12B0-CCF4-B6E4-0546FC19AA3BE72D/

itsCongressionalmandates infutureyears. Ex‐ImBank’svision istocreate and sustain U.S.jobsbysubstantiallyincreasingthenumberofcompaniesitserves andexpandingtheiraccesstoglobalmarkets.Thestrategicplanconsistsofthree primarygoals:

expand awarenessofEx‐ImBankservicesthroughfocusedbusinessdevelopmentandeffectivepartnerships.

improveeaseofdoing businessforcustomers. create an environment thatfosters highperformanceand innovation.

Throughimplementationofitsstrategicplan, Ex‐ImBankhopes togetmoreU.S. companies toexportto morecountriesand morecustomers,andtherebycreate morejobsintheUnitedStates.

ECA Focus on Operational PerformanceAlthoughECAsmaypursuedifferentphilosophicaltenets andnationalpolicies,negotiationsamongG‐7ECAshaveledtoaconvergence inprogramfeatures,particularlywithrespecttosovereigntransactions.TheresultingOrganization for EconomicCo‐operation andDevelopment(OECD)Arrangements(OECD,2011) establisha commonframeworkforcorefinancing elements,riskratings, and minimumpricinglevels.Theunderlying objectiveis toprovidealevelplayingfieldforexportsand toencouragecompetitionamongexportersbasedonthequalityandpriceofgoodsandservices,ratherthanonthe mostadvantageousgovernment‐sponsoredfinancingterms.

Theconvergence inprogramshasengendered agreaterfocusonoperationalperformanceandcustomerservicelevelstoenhanceECAcompetitiveness.FromthestandpointoftheECAs,performancemetricsforcustomerserviceoftenfocus onthefollowingareas:

Transaction response time,includingthespeedofapplicationprocessing,decision‐making,andclaimsprocessing

Availability andknowledgelevel of stafftoanswerquestions Informationrequirements andsupportingdocumentationforapplications Customerinterface withITplatform(includingtheon‐lineapplicationprocess,

availability, andquality ofinformation,etc.)

Performance Metrics Performancemetricsallowmanagementtotrackprogresstowardits objectivesinatransparent manner.Inaddition, theyprovideinsightfuldata thatcan beutilizedfora varietyof purposes:toensureresourcealignment,highlightpotential problemsandtakecorrectiveaction,developstrategy, andtoincentivizeperformance.

GPRAestablishedtheframeworkfor results‐orientedplanning,measurement,and reportinginfederalgovernmentagencies.The GPRAModernizationActof2010significantlyrevisedtheperformanceframeworkforfederalagencies creatinga more definedperformance frameworkby defininga governance structure andbybetterconnectingplans,programs,andperformanceinformation.Thenew lawrequiresmore

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Section5ofExecutiveOrder13571statesthat“independentagenciesarerequestedtoadheretothisorder.”

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befoundathttp://www. gpo.gov/fdsys/pkg/FR-2011-05-02/pkg/2011-10732.pdf.

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Datafor theevaluation aredrawnfromfourprincipalsources: (i)areviewof internalreportingsystemsincludingElectronicReportingSystem (ERS)andrelatedmanagementreports,(ii) interviews withEx‐ImBankstaff,(iii)interviewswithaselectgroupofECApeersand(iv)abroadersurvey of other ECAs on performance metricsforoperationalefficiencyandbestpractices.The surveyfocusedonECA best practices,suchastheselection andmeasurementofperformancemetrics foroperationalefficiency,recently‐introduced initiativestoimprovecustomerservice, andhowinstitutionsbalancecompeting agendasoftimelycustomerresponseand theneedtocompletesatisfactory transaction duediligence.

SurveyrespondentsincludedtwelveECAs:ExportDevelopmentCanada(EDC),SACE,EulerHermes,Ex‐ImBank,Finnvera,Atradius,UKExportFinance(formerlyECGD),Export‐ImportBankofKorea(K‐Exim),ExportGuarantyandInsuranceCorporation(EGAP),EKF,EKN,andNewZealand TradeandEnterprise(NZTE). Inpreparing thesurvey,Ex‐ImBankOIGsoughtinputfromvariousinternalproductgroupsaswellasotherECAs.

III. FINDINGS AND RECOMMENDATIONS PhaseOne oftheevaluationproducedseveral findings andattendant recommendationswhichareoutlinedbelowanddividedintotwo categories: CustomerSatisfactionandPerformanceObjectivesandMetricsforOperationalEfficiency.

A. Customer Satisfaction Finding A: Ex‐ImBanklacksasystematicapproachtosolicitingcustomer feedbackonitsperformanceandtheoveralllevelofcustomersatisfaction.Indeed,Ex‐ImBankhasnotconductedacomprehensivecustomersurvey since2004.

Solicitingcustomerfeedbackin atimelyandsystematicmanner providesvaluableinsightastocustomerpriorities,perceivedperformance,areas forimprovement,and informsfutureresourceallocation.Our ECASurveyshowsthatagencies shouldbeproactiveandsurveytheirclientsonaregularandsystematicbasis.In particular,theECAsurveyconfirmed therelative importance ofcustomerservicewith all ECA’srespondingthat customersatisfaction waseither “very”or“extremely”important inachieving organizationalobjectives.

Asystematicapproachtodefining andmeasuringcustomersatisfactioniscriticalasdifferences indefinitionanddata collectionprocedures within an organization maygenerateambiguousresults.Despitethechallenges,customerfeedbackonoperationalperformanceprovides valuableinsightonthe alignmentofresources andcustomerneeds.

ECAsurvey respondents citedseveralpractical suggestions onsolicitingcustomer feedback.First, embeddingthe feedbacksolicitationin theoverallcustomerexperience,i.e.,at theendofthetransaction. Thisincreasestheresponserateandresultsthataremoreaccurate.Second,usingfocusgroupstoinformsurveydesign. Third,cross‐validatingtheresultsofsurveyanalysiswithfocusgroupsandselect interviews.Finally,utilizingannual

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surveysto determine thecurrent andfuture needsof clients—an importantinitiativegiventhechallenging economicenvironment.

Asmentionedabove,President Obama’srecent Executive Order 13571requeststhatindependentagenciesdevelopacustomerserviceplantostreamlineservicedeliveryandimprovecustomerexperience. To thisend,theOIGrecentlyauthoredacustomer satisfactionsurveyinconjunctionwithEx‐ImBanktobeconductedinApril,2012.Thecustomersurveywillprovidevaluablefeedbackoncustomerprioritiesand theperceivedperformanceofEx‐ImBank.

Recommendations:

1) Ex‐ImBankshoulddevelopasystematicapproachtodefining and measuring customersatisfaction. Animportantcomponentofthis initiativeistoimplementacustomersurveyonanannualbasistovalidatetheprioritiesof itscustomersandtosolicitfeedbackonEx‐ImBank’sperformance.

2) Ex‐ImBankshoulddevelopacustomerserviceplaninaccordance withExecutive Order 1357onimprovingcustomerservice.

3) Ex‐ImBankshouldparticipatein aninter‐ECAdialogueonoperational performance andcustomerservice tolearn moreaboutECAbestpractices.

Management Response:

PleaserefertoAppendixD;Page32.

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B. Performance Objectives and Metrics for Operational Efficiency. Finding B:AlthoughEx‐ImBanktrackscertainkeyperformanceindicators,todate,Ex‐ImBankhasnotpublished comprehensiveperformanceobjectives,standards for acceptableperformance,andmetricstomeasureprogress initscredit programsinaccordancewith GPRA.6 OurECAsurveyrevealedthatan ECAbestpracticeistheimplementation ofagency‐wideperformancemetrics thataddressbothquantitative and qualitativefactors.

Withregardstotransactionresponsetime,whileEx‐ImBanktracks suchtimeforitsshort‐termandSmallBusinessportfolio,itlackstransactionresponsetargets forthelong‐termloan andguarantee programs.Theseprogramsaccountforover80%ofthetotaldollarvolumeofEx‐ImBankauthorizations.Ex‐ImBankhasrecentlystartedto generate a listoflong‐termtransactionsthathavereached100days inthesystem.Thislist isprovidedto Ex‐ImBank’sChiefOperationsOfficer(COO)onarecurringbasisandgives theCOOandothersenior managerstheopportunity tosee transactionsthathavereachedthismilestone.

BeginninginFebruary 2012,under theGPRA ModernizationActof 2010,Ex‐ImBankmust,amongotherrequirements,preparean agencyperformanceplanto establishperformancegoalsandindicators,describehowthegoalswillbeachievedandmeasured,and describemajormanagementchallengestheagency facesalongwith planned actionstoaddresssuchchallenges.

Recommendation:

4) Ex‐ImBankshoulddevelopandimplementconsistentperformance standardsandmetricsthroughouttheagencyandactivelymonitorperformance inaccordancewiththeGPRAModernization Actof 2010.Suchperformancemetrics shouldbepublishedandprogresstrackedon Ex‐ImBank’swebsite intheinterestof greatertransparency.



Thisfinding wasalsocited inanOIG memo datedDecember2, 2010toEx‐Im’sGeneralCounsel.ThememohighlightedthatEx‐ImwasnotissuinganannualPerformanceandAccountabilityReportunderthe ReportConsolidationsActof2000. The GeneralCounselrespondedthat Ex‐Im wouldbeincompliancewithGPRA inFY2012.

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6

Finding C: Ex‐ImBankcurrentlydefinesitsoperatingefficiencyinlargelyquantitativeterms—citingthevolumeofexportsfinanced, numberofjobssupported,and the numberofauthorizationsperemployee.Whilethesemeasuresarekey toEx‐ImBank’smission,theydonot address importantqualitative issuessuchasthelevelofcustomersatisfaction,orthelevel ofperceivedrelevancetoEx‐ImBankclients.

Asnoted above,ExecutiveOrder13571places particularemphasisondevelopingcustomerserviceplansandstandardsthat implementbestpracticesfrom the privatesector.OurECAsurvey revealedthatanECAbestpracticeistoincludebothquantitative andqualitative measures,suchascustomersatisfactionlevels,as metricsinagency performanceplans.Forexample, certain ECAs implement a balanced scorecardapproachandincorporatecustomersatisfactionasanimportantmetric fortheappraisalprocess. OtherqualitativemeasuresusedbyotherECAsinclude:

NetPromoterScore: Thismetricseekstodeterminethe degreetowhichECA clientswouldrecommenditto a fellowexporter.

Measureof Significance:Amacro variablethat measuresthelevelofsignificance oftheECAtoaclient’soperations.

QualityofService:Avariablethat relates totheperceived levelofqualityofa serviceprovided.

KnowledgeLevelandAvailability ofStaff:A variablethat requestsclientstorate theknowledgelevelandavailability ofstaffto answerquestions.

Recommendations:

5) Ex‐ImBankmanagementshouldredefineits performancemeasures andimplementabalanced scorecard approach,incorporatingbothquantitative and qualitative metricsinitsagencyperformanceplan.



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Finding D:Ex‐ImBankcustomerservicemetricsforresponsetimelargelyreflectinternalpoliciesandconstraints,withinsufficientinputfromcustomers.Absentaconsistentapproachtosolicitfeedback,Ex‐ImBankmanagementmayonlybe privytoanecdotal commentsandnot tocomprehensivecustomerpriorities.

OurECAsurveyrevealedthatcustomerservicemetricsforresponsetimeshouldbeestablished inaccordancewiththe needsof the customerbase. ECAsurveyrespondents commented thatperformancemetrictargets forresponsetimeare set inconsultationwiththeclient andbasedon feedback fromperiodiccustomersurveys.SeveralECAshighlighted theimportanceoftransparency andcommunicationthroughoutthe transactionaseffective toolstomanagecustomerexpectations.Asonerespondentnoted,“Wemaintain a closedialoguewithclientsthroughoutthetransactiontocommunicatepolicyguidelinesandtounderstandtheir timingconstraints.”

Further,wefoundinconsistent approachestomeasuring customer responsetimeatEx‐ImBank.Certainproductgroupswaitforacompleteapplicationbefore trackingresponsetimewhile othersmay start earlier but“stoptheclock”while waiting forcustomersto respondto informationrequests. Inaddition,productgroupsmayusedifferent milestonestomeasure response time,includingthefollowingcycles:application toletterofinterest,application tocreditapproval/authorization, application tofinaldeliveryorclosing,etc.Althoughdifferencesinprogram featuresmay suggestdifferent approaches,operationalperformancemetricsshouldbeconsistentlydefined andimplementedthroughoutEx‐ImBank.

Recommendations:

6) Ex‐ImBankshouldsolicitcustomerinputonitsoperationalperformanceand revisititsmetrics andcustomerservice responsetimelevelsto reflectcustomer expectations.

7) Ex‐ImBankshoulddevelopauniformresponse timecycletoeffectivelymeasure performance.



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Finding E:Ex‐ImBankneedstoimprovethemonitoringoftransactionresponse time for long‐termguarantees anddirectloans.As notedabove,theCEO ofBAFT‐IFSAnotedhowvariousstakeholdersbelievethatlongtransactiontimescancompromisedeals. Similarly,Ex‐ImBankOIGcontinuestoreceiveanecdotalevidencefromstakeholdersthat internalprocessing inefficienciesareresultinginlongerprocessing timesforcertaintransactions.

Transactionresponse timecontributestoEx‐ImBank’soverallcompetitiveness andis acritical factorinitsclients’ abilityto generate newexport business.Althoughrevenuesperemployeehaverisen,responsetimeforlong‐termproductshassufferedasEx‐ImBankstaffand IT budgetshavenotkept pacewiththegrowthinnew business.Asaresult,certainEx‐ImBankclientshave complainedin thepastabouttheapprovaltimes andprocess.InterviewswithEx‐ImBankproductmanagersconfirmed thatcustomers’feedbacksuggests theneedtoimprovetheresponsetime ofatleastoneofthefollowingprocesses: application process,decision‐making,andclaimsprocessing.

OurECAsurveyrevealedthatECAsviewresponsetime asanimportantfactor intheabilityofcustomerstowinadditionalexportbusiness andtoenhancecompetiveness.Inaddition, respondentsfeltstronglythatresponsetime isanimportantdriverof customersatisfaction andrepresentsasharedresponsibilitywiththeclient.Whenasked inwhichareasclients requestbettercustomerservice,ECAsurveyresponsesidentifiedtransactionresponsetimeasthe mostfrequentlycited. Othersincludedinformation requirements,availability, andknowledgelevelof staff,andclient interface withthe agencies’IT platform.

Data on Transaction Response Times

AlthoughEx‐ImBankhasmadesubstantialprogressinitseffortstoimplementresponsetimemetrics withintheSmallBusinessGroup,thelong‐termloanandguaranteeactivitieslackprecisemetrics.Ex‐ImBankhasrecentlystartedtogeneratealistoflong‐termtransactions thathave reached 100daysinthe system.ThislistisprovidedtoEx‐Im Bank’sCOOonarecurringbasisand gives the COOandothersenior managerstheopportunitytosee transactionsthathavereachedthis milestone.Actualresponsetime forlong‐termloanandguaranteeactivitiesasmeasuredby“Average DaystoDecision”hasincreasedsinceFY2009.

Inaddition, there issubstantialvarianceinthe meanmonthly scoresforresponsetimesasindicatedbelow.Forthepurpose ofthisanalysis,theInspectorchose“averagedaystodecision”ratherthan“averagedays toauthorization.” The formerincludestransactionsthatwerenotapprovedand/orunassigned.

Areviewof Ex‐ImBank’sERSinformationreportingsystemillustratesthefollowingresponse timeperformanceperdivision:

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Long‐and Medium‐Term Guarantees — New Business

Long‐termguarantees represent 63.5%and 63.1%ofEx‐ImBank’s totaldollaroutstandingsatFY2010andFY2011respectively.Averagedays to decision rosefrom 126days inFY2009to 186days inFY2010,andtotaled 140days inFY2011.There isalsosubstantial variationinthemean monthlyscoresinFY2011rangingfrom91daystoahighof308.Atpresent,Ex‐ImBankhasnotclearly defined internalresponsetimemetricsforlong‐termguarantees, norarethereothermetricsforoperational efficiency.Medium‐termguarantees accountfor only2.0% of thetotalportfolioforFY 2011.

Long‐and Medium‐Term Loans — New Business

Averagedaystodecisionforlong‐termloansrosefrom92days inFY2009to260days inFY2010.Althoughthe2011averagedeclined from2010levels,itisstillwellabovethe 2009average.Inaddition,thereissubstantialvariation in themeanmonthlyscoresinFY2011rangingfrom 128days to ahighof302days.As withlong‐termguarantees,Ex‐ImBankhasnotsetaninternalresponsetimemetric forlong‐term loans.Long‐andmedium‐termloans comprise18.8%oftotalFY2011 Ex‐ImBankdollarexposure.

Export Credit Insurance

Insuranceproductsaccountforapproximately10.4%of thetotal portfolio,withshort‐terminsuranceproductsaccounting for thebulkofthevolume.Exportcreditinsuranceconsistsofthreecategories:Short‐Term Multi‐Buyeractivity,Single‐BuyeractivityandSpecialBuyer/IssuingBank CreditLimits (SBCL's/IBCL's).TheTradeCreditInsurance division(TCI)processesmostoftheMulti‐BuyerandSBCL/IBCLactivity. TheTCIdivisionhassetanoverallturnaround timeofunder15days asthecustomerservicelevel.

Tothisend,TCIhasimplemented severalmeasurestoboostperformance:(i)supplementingstaffbytwopermanentunderwriters andfour underwritersinthefield;(ii)modifyingperformanceappraisalgoalstoreflectcycletimeobjectives;(iii)simplifyingprocesses,incorporatingmoreautomateddecision‐making ofsmallertransactions;and (iv)systematizingmanager review ofstalecasesonaweeklybasis.TCImanagementconfirmed thatithasimplementedthesemeasuresandhasmetthe followingperformancestandardsin2011.

Page14

TCI PERFORMANCE LEVEL TARGETS

“Fully “TopPolicies “Excellent” Effective” Performer”

New&AmendSTMulti‐buyer 15workdays 10workdays 7workdays Policies(incl.delegatedauth.)

STExpressExportCreditInsurance 10workdays 7 workdays 5 workdays(nodelegatedauth.)

Multi‐buyerPolicyRenewal

BuyerCreditLimits<$300,000(new)

(renew)

$300,001‐$1MM

$1MM‐$10MM

Prior to Prior to 14daysexpiry expiry beforeexpiry

7workdays 6workdays 5workdays




Working Capital Finance (WCF)

WCFaccountsforapproximately10%ofthetotalFY2011authorizations.Transactionresponse timesaredelineated in termsofhowthetransactioncreditisapprovedwiththreeprimarycategories:DelegatedAuthority Transactions,FastTrackTransactions,andNonDelegatedAuthority.Of thethree,Delegated Authorityaccountsfor90%oftotalvolume.Thesetransactionsare approvedandfundedbyotherbanks undertheprogram,withnotice providedto Ex‐ImBank.Assuch,Ex‐ImBank’sperformancedoesnot directly affectdeliveryofcredittothecustomer.

FastTrack Transactionsalsofallunderthedelegatedauthority programbutfalloutsidethestandardapprovalguidelines. Thesetransactionsaregenerated byasmallgroupofexperiencedlenders andmustbereviewedbyEx‐ImBankwithina tendayperiod.Finally,NonDelegatedAuthorityTransactionsmustbeunderwrittenbyEx‐ImBank.Thisinvolvesafullcredit analysiswith longerresponsetimes.However,theyrepresentonly6%oftotalWCFtransactionsin2011.

WCFreacheditstargetedobjectiveofanall‐inturnaroundtime of25daysbyyearend2011.To thisend, thedivisionimplementedseveralmeasures. First, thedivision hiredtwoadditionalrelationshipmanagerstoimproveresponsetimes for non‐delegatedauthoritytransactions. Second,WCFimplemented a tighterweeklyreportingmechanism.Thelatterhelpsmanagement identify andresolveproblemsina timelymanner.AccordingtoWCFmanagement,quickerresolutionofoutstandingissuesshouldresultinanoverallimprovementin turnaroundtimes.

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Recommendations:

8) Ex‐ImBankshouldimplementimprovedmonitoringproceduresand appropriateresponse timetargetsforlong‐termguaranteesandloans.Metricsshouldreflecttheinherent complexityoflong‐termstructuredfinancingsand shouldbeestablished inconsultationwith clients tobetterunderstandtheirpriorities.

Management response:


Page16

Thescopeoftheprogr

IV.

deliverables.

SCOPE AND

am

METHODOLevaluat ionconsistso

OGYfthreephases,eachwithspecific

PhaseI:

Planning,Research,andCompliance

methodology,objectivDesigna

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ObtainIGsignoff.

rganizetheprogramevaluatio n.Keydeliver

es,timetable,andpoints ofinquiry.ablesi

ncludethescope,

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ionalefficiency;

is

dexternalcontactsregarding

reviewwthesurvey.

PhaseII:ResearchandAnalys

ithEx‐ImBankstaff.

efficiency,includingstepsEx‐IReviewcurrentEx‐ImBankpolici

mBankisundertakingtoimprovesandproceduresrelatedtooperation

responseal

performance.

eits time

termprograms).Reviewhistoricalresponsetimeperformanceperproductline(s

‐

InterviewEx‐ImBankproductmanagers.

horta ndmedium

InterviewotherECA’s.

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DetermineECAbestpr

Compileandanalyzesuarveyresul

BenchmarkEx‐ImBankperformancectices.

PhaseIII:VerificationandFinalReport

tsincludingbasicdescriptive

statistics.

againstECAbestpractices.

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entsure man

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Page17

APPENDIX A– ECA SURVEY RESULTS ON PERFORMANCE METRICS FOR OPERATIONAL EFFICIENCY

September 2011

1) Towhatdegreedo the followingphrasesaccuratelydescribeyourorganization’s approachtosettingperformancemetrics foroperational efficiency?Pleaseselect avaluefrom thefollowingrange:1,2,3,4,5,6,7,8,9,and10(with 10=mostaccurately describes); don’tknow: NA

RANGE MEAN Performancetargets varyfromproducttoproduct 1‐10 8.4

Performancetargets reflectECAbestpractices NA NA

Performancetargets areinlinewith ECApeers NA NA

Performancetargets reflecttheneedsofourclient 3‐10 7.5base

Performancetargets areincludedinthe 7‐10 9.2managementobjectives

Performancetargets arecriticalto achieving 3‐10 7.2operational efficiency

Performancetargetslargelyreflect ourinternal 5‐10 7.5policiesandconstraints

MostECArespondentsconfirmed thatperformancemetrictargets reflectinternalpoliciesandconstraintsbutalsotheneedsoftheircustomerbase.Meanscore forbothwas7.5.Second,practicallyallECA’scommentedthatperformance metric targetsareincludedasmanagementobjectiveswithameanscore of9.2.SeveralECA’sreferenceddifferentperformancetargetsacrossproductlines.Finally,severalhighlightedtheimportanceoftransparency andcommunicationthroughout thetransactionaseffectivetoolsto managecustomerexpectations.

SelectECACommentsfollow:

“Wemaintainaclosedialoguewith clientstocommunicatepolicyguidelinesandtounderstand theirtimingconstraints.”

“WehavesetPerformancemetrictargetsinlinewithbusinessstrategic development.”

“Onabroad levelourFinancialObjectivesare setbyTreasury…oneofthesefinancialobjectivesdemandsthat wegenerate enoughpremiumovertimeto coverallrisk andadministrationcosts.Wereportagainstthese annuallyinourAnnualReportandAccounts. Atthesame timeourorganizationisalso

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setadministrative expenditure limits,spreadoverthreeyears…based uponareviewofoperational efficiencyandeffectiveness.“

“Wehaveuptonownorealdedicatedpeopleto lookatthisproductbyproductordivisionby division,however,giventhatwearereorganizingthebusinessforthefuture wewillhave peoplein chargefor that throughoutthe organization.”

“Weusesevenperformancemetric targetsspreadacross ourbalanced scorecard.”

2) Howimportant iscustomersatisfactionto achievingyourorganization’soverall objectives?

Pleaseselectonevalue: Frequency Mode

Extremely important 4

Very important 7 Very

Somewhatimportant

Lessimportant

Theimportanceofcustomerserviceresonates wellwithECA’s. Indeed,thesurvey resultsconfirmedtherelative importanceof customerservicewithallECA’sresponding thatcustomersatisfactionwaseither“very”or“extremely”importantinachieving organizationalobjectives.Thatsaid,theremaybeoccasionswheninternalpoliciesconflictwithcustomerrequests.SeveralECA’scommentedthattheyhavecreateddedicatedunits toresolvepotentialclientserviceissues.


“Overthepastyears,we haveestablishedaseparateCustomerCare Unit,specificallyinresponsetothe importance itgivestocustomer satisfaction;thesatisfactionofour clients isamongstourmaincorporateobjectives.OurCustomerCareincludesservices suchasatoll‐free numberand adedicatedemailaddressforinformationenquiries.”

“Thisisour absolutemaingoalfor exportersandbanksas well asourguardianauthorities.”

“Thereare instanceswherewemustdecline anapplication,whichcanconflictwiththecustomers’position.Weattempttobeastransparentaspossiblewhenassessingclient needstokeeptheirexpectations as realisticaspossible.”

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3) Please rank therelative importanceofeachoperational factor asadriverofcustomersatisfaction. Pleaseselectavaluefromthefollowingrange:1,2,3,4,5,6,7,8,9,and10(with 10=mostimportant); don’tknow:NA

Range Mean

Overalltransactionresponsetime 7‐10 9.0

Speedofapplicationprocessing 7‐10 8.6

Speedofdecisionmaking 7‐10 8.6 Clientinterfacewith ITplatform/online 1‐10 6.1applicationprocess Availability ofinformationonwebsite 5‐10 6.4 Information/documentationrequirements 4‐10 7.5forapplications SpeedofClaimsprocessing 3‐10 7.5

Availability andknowledgelevelof staff 7‐10 8.6

Other,pleasespecify

Amongthe potentialdrivers, transactionresponsetime,speedofapplication,decision makingandavailability/knowledgelevelstaff rankthe highest.


“Theimportanceof eachoftheabovefactorsshouldbeassessed inrespecttothetransactiontype(e.g.forcomplextransactions,theavailabilityandknowledgeofstaffismorerelevantthanthat oftransactionresponse time as ameasure). Withrespecttoinformation/documentationrequirementsforapplications,wegiveimportance tothetransmissionofinformation quality, rather than theparameterof receiptofanofficialapplication form.Thisprovides foramoreflexibleapproachindealingwiththeclient,as thereviewofatransactionisinitiatedas soonastherelevantinformationismadeavailable.Theprocesswouldoverallrequirethatanapplicationbeprovided,butourreviewisconductedevenpriortohavingreceived one.”

“Wehavejustrecently simplifiedourapplicationformsin ordertosatisfycustomerdemand.”

“Wedonotoffer anonline applicationplatform.Thisrecognizes thatthemajorityof ourclients areSME’sandone‐to‐oneeducationiscritical tosupportexportersoffering financeortomeet buyerrequirements.”

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4) Howoftendoesyourorganization measurecustomersatisfaction regardingoperational efficiencybyutilizinga systematic approachincludingsurveysand/orquestionnaires?

Pleaseselectonevalue: Frequency Mode

Onceayearormore 5 X

Everytwoyears 2

Everythreeyears 1

Everyfourtofiveyears

Adhocbasis 2

Wedonot usesurvey techniques

Customerfeedbackon operational performanceprovides valuable insightonthe alignmentof resources andcustomerneeds.Methodologyusedto measurecustomersatisfaction differs amongthevariousECA’s.Onone endof thecontinuum,severalinstitutions employananecdotalapproachandmeasurecustomersatisfactioninfrequently.Ontheotherend,five ECA’scommentedthattheymeasurecustomersatisfaction atleastonceayear,while tworeplied everytwo years.

Bestpracticesdictate thatECA’sactproactivelyandsurveytheirclientsona regularandsystematicbasis. ECArespondentscited severalpractical suggestions.First,toimbedthesolicitationforfeedbackintheoverallcustomer experience,perhapsat theendof thetransaction.Thisincreasestheresponserateandmay resultinresultsthat aremore accurate. Second,tousefocusgroupsto informsurveydesign.Third,tocrossvalidatetheresults ofsurveyanalysiswithfocusgroupsandselectinterviews. Finally,to utilize annualsurveystodeterminethecurrentand future needsof theirclients—animportant initiativegiven thechallengingeconomicenvironment.


“Acustomersatisfaction survey isconductedonanannualbasis.Theresultsdrawn fromthesurvey areincludedwithin theMBO.”

“Wearedoingacustomersatisfactionsurveynearlyevery 3years,however,thisisnot focusedonoperational efficiencyonly”

“Ourlastsurvey(administered in 2010)soughtresponsesfromexporters,banksand industryrepresentativeorganizations.Thepurposeofthis surveywastwo‐fold.Itwasdesignedtoassessthecurrent and expectedneedsofexportersandbanksduringthe financialcrisis(i.e.,aimedto gaugeexporter

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andbanks productneeds);andsecondly,soughtfeedbackonour operationalefficiency.”

“Weinitiatedayearlycustomersatisfactionsurveyapproachin spring2011.Nextmeasurement willbeinthe fallof2012.”

5) Towhatdegreedo the followingstatementsaccuratelyreflectyouragency’s experience withtransactionresponsetime?Pleaseselect a valuefromthefollowing range:1,2, 3,4,5,6,7, 8,9,and10 (with10= mostaccuratelydescribes);don’t know:NA

Range Mean

Responsetimeisan important factorinthe abilityof5‐10 7.5ourclientstowinadditionalexport business.

Responsetimecontributestoouroverall 5‐10 7.9competitiveness.

Responsetimeisactivelymonitored. 1‐10 7.8

Responsetimeiscloselylinked toourITcapabilities. 1‐10 6.1 Responsetimeiscloselylinked toindividualaccountabilityandtheallocationofresponsibilities 1‐10 6.4withinour organization.

Responsetimelargely meetsthe expectations ofour 7‐9 8.1 customers. Responsetimeisashared responsibilitywiththeclient. Clientsmustsubmitacompletean accurate 1‐10 7.8application onatimely basis.

ECA’sview response timeasan important factorinthe ability ofcustomerstowinadditionalexportbusinessand toenhanceECAcompetiveness.Ona 1‐10scale,meanscoreswere7.5and7.9respectively.In addition,ECA’s feltthatresponsetimemeets theexpectationsofourclientsasevidencedbyameanscoreof8.1Finally,mostECA’sviewresponse timeasa sharedresponsibility withtheclient withameanscoreof7.8.

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SelectECAcommentsfollow:

“Weregard timeliness ofapplicationassessment(aka ‘handling time’)asan importantpartofcustomerservice.Atthetimeanapplication isreceived,weinform ourclients oftheestimatedtimeframeforthe assessmentandformaloutcomeoftheirapplication.Weseek toinformourclientsif theprocessfor assessingtheirapplicationisdelayed(i.e., iftheassessmentoftheirapplication isdelayedbecauseit istakinglongerthanusualtoobtainfinancialstatementsfromanoverseasbuyer).”

“transaction response timeiscloselylinkedtoourITcapabilities,”specificallyforsmallandmediumsizedenterprises…Transaction responsetimeisdependenton allactors, sowedonotattribute ittoindividualresponsibility.Itisonacasebycasebasis.

“Ourorganizationdoes notcurrentlyformallycollectandreportonresponsetimes,butrelieson the localmanagementtomaintainappropriate levelsof performance.Itdidpilotasetof performancemetricsafewyearsago,whichsuppliedsomelimited dataon responsetimes,butthesewerediscontinued.”

“Ourorganizationhas variousinternalguidelinesforresponse times,whichmainlydependsonthe transaction structureandrelevantproduct.Themedian responsetime andtimeframevaries,forinstance should atransaction bechanneledthrough ouronlineplatformorshould itratherrequiremorethoroughriskassessmentforcomplexstructures.”

6) Whichofthefollowing timeframesismorecommonlyusedtomeasureinternalresponse time?

Frequency Mode

Fromsubmissionofcompleteapplication 0todelivery ofinitialletterof interest.

Fromsubmissionofcompleteapplication 2tofinalcreditapproval. Fromsubmissionofcompleteapplication todelivery ofproposedtermsand 1 conditions.

Fromsubmissionofcompleteapplication 4 Xtotransactionclosing.

Other—pleasestate: 2

Approachestomeasuringresponse timedifferamongECA’sandamongproductswithinthesameorganization.SomeECA’swaitforacompleteapplicationbeforetrackingresponsetime; othersstartearlierbut“stoptheclock”whilewaitingfor

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customerstorespondtoinformationrequests.Inaddition,ECA’susedifferentmilestones includingapplicationto letterof interest, applicationtocreditapproval/authorization,applicationtofinaldelivery,etc.CertainECA’susemultiplemilestoneswithdistinctservicelevels foreachproduct.Fromabestpracticeperspective,itisimportanttorememberthatthecustomer’sviewmaynotbepointtopoint,butratherthe“totalityof theexperience.”


“Wealsomonitorand measurethe preliminaryevaluationservice,whichisdonethroughouronlineplatform.Thetime framemeasuredisfromsubmissionofpreliminaryrequest topreliminaryresponseprovided.”

“Fromsubmissionofapplication (completeornot)untildeliveryofoffer”

“Wemeasureand trackeachofthese,butourservice standards are basedon theoneselected.”

7) Haveyoubeenencouragedbyyour customerstoprovide bettercustomerservice?Ifyes,inwhicharea?

Frequency Mode Informationrequirements for

4applications Documentationforapplication 5processing

Accesstoonline applicationprocess 5

Speedofapplicationprocessing 6 X

Speedofdecisionmaking 5

SpeedofClaimsprocessing 5 Availability ofstafftoanswer 4questions Knowledgelevelofstaff 5

Availability ofinformationonwebsite 1

ITplatform 2

Other,pleasespecify 2

Intermsofcustomerfeedback,practicallyallECAparticipants havebeen encouraged toimprovetheresponsetimeof atleastone ofthe followingprocesses:application process,decision‐making,andclaimsprocessing.

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Ontheotherhand,theresultsfromquestionfivesuggest that ECA’s believe their response times“largelymettheneedsof the clients”with ameanscoreof8.1. Additional areasoften citedbyclientsinclude:

(i)information/documentation requirements,and(ii)knowledgelevelof stafftoassistclients.


“Inthepast wehavebeenencouragedtostreamlineandsimplify the textofourinsurancepolicies andguarantees”

“Atpresent, ourmainfocusisactuallyonthecustomerswhoarenotincontact,orwhomaybeunawareofourorganization.Weareengagedin amarketing programtoraise awarenessofour organizationand itsproductsandservicesamongpotentialcustomers,particularlySMEs.”

8) Towhatextent isemployeeperformancedependentuponthedegree towhichoperational efficiency metricsare met?

Pleaseselectavaluefromthefollowingrange: Range Mean

1,2,3,4,5, 6,7,8,9,10(with10= mostimportant); 1‐10 6.7Don’tknow:NA

AlthoughvirtuallyallECA’scommentedontheimportanceofcustomerservice,fiveresponded thatthismetricis eithernotusedorhaslessimportance inthe annualappraisalprocess.Thismaybedueinparttotheinherentdifficulty ofmeasuringcustomersatisfaction objectively. Second,management maydefinesuccessparameters largelyinquantitativeterms—toutingthevolumeof exportsfinanced,numberofjobssupported,and revenuesper employee.Whilethesemeasuresareimportant, theydonot address theunderlying issueofcustomer satisfaction.

Bestpracticessuggest including customersatisfaction levelsasametricfor performanceappraisals andincentivecompensation.Forexample,certainECA’simplement abalanced scorecard approachandincorporatecustomersatisfactionasanimportantmetric for theappraisalprocess.


“Customer Satisfaction isamong a numberoffactorsthat affect howemployeeperformanceisassessed. Theseareincorporatedintheoverall MBObutarenotperse afactor thatdrivesthe individualemployeeperformance.Other variousfactors,including soundunderwritingpractices areamongstthemaindrivers.”

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1) “OurUnderwritersare thekeydriversoftheprocessand havetocoordinate withallotherassociatedincharge.”

“Newsuite ofKPI’sincluded,i.e.,managerialmetrics for2011/12whichmeasure‘handling times’andtransactionsperunderwriter”

“Wefocusonskillsets.”

9) Towhatextent isoperationalefficiencydefinedbythefollowingfactors?Please selectavaluefromthefollowing range:1,2,3,4,5,6,7, 8,9,10(with10=most important); Don’tknow:NA

Range Mean Qualitative (compliancewithpolicyissues, 6‐10 7.9duediligence,lossexperience, etc.)

Quantitative (speed,numberofapplications 5‐10 6.0processed, etc.)

BothQualitative andQuantitative factors 5‐10 8.6


“Wehavefiveoverallcompanytargetsthat are measured quantitativelyand twothatare measured qualitatively.Thesetargetsdotoanextentreflectoperational efficiencywithinthecompany.Especiallysincealloverallcompanytargetsarecascadeddownthroughtheorganization.Eachdepartment hasthreequalitative andthreequantitative targets thatcontributes totherealizationoftheoveralltargets.”

10) Pleasedescribeanyoperationalmeasures/performance metricsthatyouhaverecentlyintroducedaswellasinitiativestoimplementthem. Commentsfollow:

“Weprepareavariety ofmonthlyinternalreports,whichprovidean overviewoftheoperationalefficiencysuchastheprocessingof transactions.Suchreportsincludebreakdownby geography, response times,producttypeand othersimilarindications.”

“Atyearend(2011)ouraimisthat25percent ofallapplicationswillbesubmittedviaon‐line(15percent atend ofMay).”

“Managementfor therespective division ischargedwithtrackingperformance. Wehavenointernaloperationalmeasureswhicharetracked byacentralgroup.”“Wehaveintroduceda yearlycustomersatisfactionsurveyand an employee satisfaction surveyeverysecondyear.Based onthemeasurements, newtargetsareidentifiedandspecific improvements toensurethat thetargetswillbereached.”

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“Wehaverecently implementedkeyperformanceindicatorsfor2011/12 including:

Claims,provisions&ExpectedLoss/TotalActualExposure Claims,provisions,movement inEL/profitbeforetax,provisions and claims

&movementinEL Claims,totalprovisions&ExpectedLoss/Notionalcashbalance OperatingExpense/Earnedpremium plusapplicationsfees OperatingExpense(ST‐TCG)/NumberofST‐TCGtransactions($actual) OperatingExpense(ECG,W/CandBonds)/NumberofECG,W/Cand Bond

transactions($actual) RevenueGrowth GrowthinTotalExposureandundrawncommitments NPAT,claims,provisionsandEL movement/AverageExposure”

11) Whatisyourapproachtowardsbalancingcompetingagendasoftimely customer responseandtheneedtocomplete satisfactorytransactiondue diligence,credit analysisandpolicycompliance?

“Theorganization and divisionofvarioustasksinthewholetransactionprocessingphaseisseparatedbetweendifferentdepartments,whichoverall providesabalancedapproachintheunderwritingoftransactions.Soundunderwritingpractices arethebackboneandprincipalelementofourbusinessmodel.Assuch, ourinternal processes havebeendesignedinsuchawayastoensurethatthetwocompeting agendasas mentioned inyourquestionarenotdetrimentaltooneanother.Wehaveinternaloperativeinstructionsthatoutline thecompleteprocess, includingthedivisionofresponsibilities thatmuchplaytheroleofasystemofchecksandbalances.Furthermore,regularmeetingsandinformation sharingsoftwareassisttoprocessinformationandtransactionsinatimely,efficientandcompliantmanner.”

“Wearedeterminednot towaiveproperduediligenceetc.”

“Ourfocusinthepast threeyears hasbeenonprocessandsystemsefficiency andeffectiveness,withoutanycompromiseonduediligence orcredit analysis.“

“Thereare nospecificguidelinesotherthankeepthecustomers happyandbeasaccurateas youcan,however,we haveoffcoursesomestandardizedformslikeourcredit reportswhichneedtohave anacceptablelevelofaccuracybeforegettingreleased.”

“Wesetclearexpectationsregardingduediligencerequiredand thetimeline forexecution.i.e.,timelinesandinformationrequirements areproduct‐specific.For example,for theSTtradecreditinsuranceassessment informationhasbeenstreamlinedandthere aresub‐delegationsinplacetoquickentheapproval

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process.Guaranteedocumentation andinformation requirements has alsobeen streamlined.

Wealsoclearlycommunicateourrequirementthattransactionswillnotbeunderwrittenifcounterpartiescannotbeappropriately assessed.”

“Nopoliciesontimelycustomerresponse.Focusisprimarilyonoverallcustomersatisfactionforwhichyearlytargetsaresetandonproper credit analysisandpolicycompliance.”

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APPENDIX B – AVERAGE DAYS TO DECISION MONTHLY AVERAGES

Average Days to Decision

Fiscal Year

Type

Month

Product

FY11 FY10 FY10 FY09

09 08 07 06 05 04 03 02 01 12 11 10

New Medium‐termLoan 70 56 238 335 56

Long‐termLoan 275 197 128 133 250 203 302 250 259 129 99 272 260 92

Medium‐termGuarantee 31 60 61 93 69 70 109 61 65 74 55 105 97 80

Long‐termGuarantee 183 135 104 91 97 114 89 143 308 51 234 103 186 126

ShortTermInsurance 20 20 17 20 20 19 19 21 30 23 23 21 31 34

Medium‐termInsurance 32 61 50 38 69 51 54 82 90 45 48 49 55 85

ShortTermWorkingCapital

30 60 71 46 61 41 54 59 50 52 39 1 41 47

APSMedium‐termClosed 35 164 63 165 141 88 21 6

APSMedium‐termPending 120

APSLong‐termClosed 42 45 148 143 178 135 254 362 143 159 137 220 142

APSLong‐termPending 156 78

SBCL‐ New ShortTermInsurance 7 8 6 7 6 4 5 6 6 8 10 9 12 11

Amendment Medium‐termLoan 70 91 136

Long‐termLoan 199 79 159 106 439 78 129 279 377 238 142

Medium‐termGuarantee 11 6 21 ‐12 14 36 124 1 185 52 7 5 106 30

Long‐termGuarantee 58 178 68 71 174 151 98 164 358 43 72 192 108


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Average Days to Decision

Fiscal Year

Type

Month

Product

FY11 FY10 FY10 FY09

09 08 07 06 05 04 03 02 01 12 11 10

Medium‐termInsurance 5 7 16 6 7 10 5 8 11 8 6 3 12 13


44 35 81 74 43 29 57 51 39 36 41

SBCL‐Amendment


Renewal ShortTermInsurance 39 43 33 34 26 33 29 36 32 41 43 40 46 43


27 64 78 51 36 27 66 86 72 58 24 41 36

SBCL‐Renewal


Source:Ex‐ImBankERSReport;October2011

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APPENDIX C – PRODUCT VOLUMES

(inmillions)

FY 2011 FY 2010

OutstandingGuarantees $47,844.0 53.7% $43,857.8 58.2%

OutstandingLoans 8,109.7 9.1% 6,447.0 8.6%

OutstandingInsurance 2,444.8 2.7% 2,377.6 3.2%

OutstandingClaims 1,677.6 1.9% 2,318.2 3.1%

Total Outstanding 60,076.1 67.4% 55,000.6 73.1%

UndisbursedGuarantees 13,585.1 15.2% 7,971.1 10.6%

UndisbursedLoans 8,622.7 9.7% 4,753.3 6.3%

UndisbursedInsurance 6,868.1 7.7% 7,488.9 10.0%

Total Undisbursed 29,075.9 32.6% 20,213.3 26.9%

Total Exposure $89,152.0 100.0% $75,213.9 100.0%

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APPENDIX D – MANAGEMENT RESPONSE

Page32

E XPORT-IMPORT B ANK OF THE U NITED STATES

March 16th , 2012

Mr. Osvaldo L. Gratac6s Inspector General Office of the Inspector General Export-Import Bank ofthe United States 811 Vennont Avenue NW Washington, DC 20571

Dear Inspector General Gratac6s,

Thank you for providing Ex-Im Bank management with the Office ofthe Inspector General (OIG)'s Report oil Perfonnance Metrics for Operational Efficiency - Phase One.

Bank management agrees with many of your suggestions. We have instituted a perfonnance management architecture that is consistent with guidance received from OMB and is right-sized given this agency's resources. You will be happy to know that we have implemented or are in the process of implementing several measures in line with this perfonnance management architecture and the suggestions in your report:

• The Bank has a 5-year strategic plan with goals, has implemented metrics to track progress towards these goals, and conducts monthly perfonnance discussions based on these metrics. In fact, this month we will be publishing some of these metrics on our website to promote transparency.

• In addition to closely monitoring the tum-around time on all our high-volume programs (which are in the short- and medium-tenn areas), we have instituted a 100-day Stale Deal List which is reviewed weekly to ensure that any transactions in the bank for over 100 days are on-track. This review identifies and resolves any bottlenecks that may be holding up a transaction (including in the long-tenn program).

• We have embarked on a Total Enterprise Modernization effort to upgrade our systems (processes and technology) and make them more efficient, more customer oriented, and in-line with the needs of the market. We are also investing in additional personnel who will focus on better understanding the customer experience at Ex-Im through surveys and other means. We intend to use this feedback to shape how we undertake our business.

• As you know, the Bank publishes an annual Competitiveness Report. Management has broadened the scope of the FY2012 report to consult with a wider set of clients and parties in the export finance world to detennine how Exim' s policies compare to market

811 VERMONT AVENUE, N.W W ASHINGTON, n c. 20571

needs and to get a read on customer satisfaction. The FY 2013 report will build on the FY 2012 effort and will include a broader survey of Exim's customers as part of its annual assessment of competitiveness.

The report cites anecdotal evidence from stakeholders regarding inefficiencies in transaction processing. Bank leadership holds a weekly meeting of the Operations Committee to review relevant data and key issues. We would appreciate getting the detailed anecdotal evidence that you reference so that we can address the issues noted. Please supply this feedback to me so that I can share it with the Operations Committee.

Thank you again for the OIG's efforts to improve Ex-1m Bank's performance metrics and customer service. The Bank appreciates your hard work and your input. We look forward to continuing to work closely with your office.

CC: Fred P. Hochberg Chairman & President

Ravi Arulanantham Senior Vice President, Strategy

James Cruse Senior Vice President, Policy & Planning

ACKNOWLEDGEMENTS

ThisreportwaspreparedbyMark S.Thorum;Assistant Inspector GeneralforInspectionsandEvaluations(acting).Other ExportImportBankstaffwhoprovidedtechnical assistance include:

Mr.Alberto Rivera‐Fournier; CounseltotheInspectorGeneral; Office ofInspectorGeneralExport‐ImportBankof theUnited States

Ms.Piper P. Moffatt;VicePresident‐InternationalRelations; Export‐ImportBankoftheUnitedStates

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Office of Inspector GeneralExport-Import Bank of the United States811 Vermont Avenue, NWWashington, DC 20571202-565-3908www.exim.gov/oig

report on performance metrics for operational ... - exim · osvaldo l. gratacós, inspector general...

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