VIDEO: What Should Board Flood Training Include
In this Compliance Clip (video), Adam discusses what effective flood compliance training for a Board of Directors should include and why finding the right level of detail can be challenging. He explains the unique role Directors play in overseeing flood compliance and the importance of providing training that is meaningful without overwhelming them with regulatory details.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to answer the question of what a board flood training should include.
Board training needs to be high-level, but the examiners expect the board to be ultimately responsible for the flood compliance program of the organization. And so, it's really a fine line to figure out what the board needs as far as training for flood compliance.
Training for the board of flood compliance, in my opinion, should include three parts.
The first part of the training is context. Our directors are not bankers. They're not flood insurance agents. In fact, they may not know much about the National Flood Insurance Program at all, yet they are the ones who are ultimately responsible for flood compliance in our organization. So, it's important to give our directors context for how the National Flood Insurance Program works, what the rules are, how they apply to our organization, what the lender's role is, and why we have to be the enforcers when people don't have to have flood insurance if they don't have a loan. And give them context so that they understand why we have to do what we have to do, so they will be able to make decisions more appropriately.
The second thing that's important to include in board training on flood compliance is to provide an overview of the rules that apply to their financial institution. We don't want to do a deep dive. That's not what we're trying to do. But we do need to empower our directors to have enough information that they can make educated decisions to help manage our flood insurance program. And so we should have a basic understanding of the core requirements - things like the flood determination, the flood insurance notice, the amount of coverage, force placement, and escrow requirements. Again, it's not the finite details, it's the high-level overview so they can understand the general picture and make decisions as it relates to the flood insurance program.
And finally, it's important to include, in any board training program, how this applies to them. If we're just talking about the nuanced requirements of flood insurance, you're going to lose our directors. They want to know, “What do I have to do to fulfill my fiduciary responsibility? What questions do I need to ask? What things should I consider? How does this apply to me?” Those are the types of things that should be included in any flood training for your board of directors.
Now, when we're training directors, there are also some other things to consider.
Number one, director training needs to be comprehensive. The examiners say that it needs to be comprehensive. And I've seen where sometimes that's interpreted as providing directors a two-hour comprehensive webinar on flood insurance training. That's probably a bit overkill because you're going to lose your directors after the first 10 or 20 minutes. However, it does have to be comprehensive. On the other hand, it also needs to be simple. It needs to be high-level. It needs to be provided in easy-to-understand terms. Directors are not familiar with acronyms. Like the SF- whatever, right? All these different acronyms from the National Flood Insurance Program, the NFIP, right? We need to use simple and easy-to-understand terms and give them context so they know how it applies to them.
Also, director training needs to be to the point. Directors like the executive summary. What do I need to know? Don't beat around the bush; just tell me what I need to know. So, the executive summary approach.
Finally, it really can't be too long. Again, a four-hour training program as we have in our Flood Foundations program in our store that's designed for compliance officers and auditors and those managing the flood program would be way too much for directors. It needs to not be too long.
Now, why is flood insurance training for the board important? Well, the examiners, as part of your compliance management system, want to ensure that your board is educated on the highest risk areas. And my guess is, right now, in the world of deregulation, if you've updated your compliance risk assessment, flood insurance training is likely at the top. It's likely one of the most risky areas of consumer compliance in your organization. And so, because it's a high-risk area, it's important that your directors are being trained and have a knowledge base to be able to make appropriate decisions. And so, when the examiners test your compliance management system, they're going to be looking at your risk assessment, which is likely going to identify flood as the highest-risk area because just a couple of errors can result in a big fine and a public enforcement action. So, it is a high-risk area, and it's important that your directors understand the core requirements.
So, if you're putting together a training program, you can copy the model that we did with ours. Essentially, what we did is we came up with three different parts. Number one is we start with an introduction and talk about the lender's role as it relates to flood compliance and how it relates to directors and their financial institutions. Then I move into the flood compliance rules and cover things like flood determinations, flood notice, the amount of coverage required, the deck page, forest placement, and even talk about escrows and private policies very briefly, but I don't get into the weeds. I keep it high level. I give them the executive summary so they understand the importance of it and talk about the key things they should be aware of. And then finally, I conclude with some risk management strategies and things directors can consider to mitigate the risk of having violations in the flood compliance portion of the lending department. That helps them fulfill their fiduciary responsibility as a director, and again how it applies to them. So, that’s how our program is set up.
So, if you’re interested in our program, what we did is create a single 30-minute video. So, we did keep it short. I found 30 minutes is about the sweet spot. In fact, if you're in person, you might want to go a little shorter than that. But what we found is that a lot of our financial institutions that utilize this end up using our private portal because we have a delivery option to set you up with a private portal so directors can view the training outside of the board meeting at a time that's convenient for them. So, 30 minutes tends to be the sweet spot for us. And so, this is a 30-minute video with a downloadable optional manual. They don't have to have it, but it provides additional detail if they want it. Or if a financial institutions like to play the video during the board meeting or put it on your own system and you can do that by downloading the MP4 or we also have also give you the slides, the manual, and the video so you can have your in-house trainer watch our video, see exactly how we do it, then use our slides and our manual to provide the training to your board.
So we have a lot of easy delivery options, and with the board, it's important to make it easy, and that's what we've done. We've made it as simple and easy as possible. If you're interested in learning more about that, you can go to compliancecohort.com/store. We've also got that deep dive program, our Flood Compliance Foundations, that's four hours long, but that's too much for lenders, so we even have a lender's program, Flood for Lenders. We've got two versions: one that's an hour 15 minutes and one that's only 30 minutes long. So if you're interested in that, take a look in our store.
That’s all for this Compliance Clip.