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76 76 INVESTMENT GOVERNMENT PROPERTY PRESERVATION Journal FHFA INSPECTOR GENERAL PUBLISHES LIST OF CHALLENGES FOR 2023 e Federal Housing Finance Agency (FHFA) Office of the Inspector General (OIG) has published a new memo identifying major pressure points and operational & performance challenges facing the agency in 2023—namely Fannie Mae and Freddie Mac (the Government Sponsored Enterprises or GSEs), Common Securitization Solutions, and all 11 of the FHLBanks. e memo, which is required by a law signed in 2000 and addressed to Director Sandra L. ompson, identified seven management and performance challenges facing the FHFA which include: » Effective supervision of the regulated entities » Stewardship of the Enterprise conservatorships » Oversight of information risk for the regulated entities » Oversight of counterparty risk, third-party risk, and fourth-party risk for the regulated entities » Oversight of model risk for the regulated entities » Oversight of people risk for the regulated entities » Oversight of resiliency risk for the regulated entities e first four bullet points above remain the same as identified last year, but FHFA Inspector General Brian M. Tomney made a point by saying, "it is important to note that continued inclusion of a challenge area does not necessarily indicate a lack of progress by FHFA; rather, it indicates that a particular area remains a challenge. is year we also highlight FHFA's oversight of key operational risks at the regulated entities, including model risk, people risk, and resiliency risk." e inspector general also notes that all seven identified challenges are interconnected in many ways due to the FHFA's role as a supervisor, regulator, and conservator which "encompasses its oversight of all the operational risk challenge areas." "For example, a regulated entity might contract with a third-party for cloud services, which may impact information, third-party, people, and resiliency risks," Tomney wrote in the memo. "In addition to overseeing the regulated entities, FHFA must also manage risks, such as information, people, and resiliency risk, in its own operations." e OIG conducted its research through audits, evaluations, compliance reviews, and investigative work, using a risk-based approach focusing on the FHFA OIG FY 2023 Annual Plan. After laying out brief conclusions for all seven pressure points, Tomney concluded by saying, "Collectively, the risks posed by the areas described above are significant and, thus, merit continued attention by the Agency. e challenge for FHFA is to identify the facets of highest risk, effectively supervise the regulated entities while they engage in these areas and remain nimble with their focus as matters continuously evolve." "OIG's risk-based work will remain grounded in these areas, and our audits, evaluations, and other projects will continue to identify findings and make appropriate recommendations to FHFA to strengthen its work."