The National Flood Insurance Act of 1968 established NFIP as an alternative to providing direct disaster relief after floods. NFIP, which makes federally backed flood insurance available to homeowners and businesses, was intended to reduce the federal government’s escalating costs for repairing flood damage after disasters. Floods are the most common and destructive natural disaster in the United States. In fact, according to NFIP statistics, 90 percent of all national disasters in the United States have involved flooding. However, flooding is generally excluded from homeowners’ policies that typically cover damages from other losses, such as wind, fire, and theft. Because of the catastrophic nature of flooding and the inability to adequately predict flood risks, historically, private insurance companies have largely been unwilling to underwrite and bear the risk that results from providing primary flood insurance coverage. Under NFIP, the federal government assumes the liability for the insurance coverage and sets rates and coverage limitations, among other responsibilities, while the private insurance industry sells the policies and administers the claims for a fee determined by FEMA. As of January 2011, 21,361 communities across the United States and its territories participated in NFIP by adopting and agreeing to enforce state and community floodplain management regulations to reduce future flood damage. In exchange, NFIP makes federally backed flood insurance available to homeowners and other property owners in these communities. Homeowners with mortgages from federally regulated lenders on property in communities identified to be in high-risk special flood hazard areas (SFHA) are required to purchase flood insurance on their dwellings for at least the outstanding mortgage amount. Optional lower-cost coverage is also available under NFIP to protect homes in areas of low to moderate risk. To insure furniture and other personal property items against flood damage, homeowners may purchase separate NFIP personal property coverage. Although premium amounts vary according to the amount of coverage purchased and the location and characteristics of the insured property, the average yearly premium was around $620 as of October 2010. NFIP is designed to pay operating expenses and flood insurance claims with premiums collected on flood insurance policies rather than with tax dollars. However, FEMA has statutory authority to borrow funds from Treasury to keep NFIP solvent in years when losses are high. NFIP, by design, is not actuarially sound because Congress authorized subsidized insurance rates to be made available for policies covering certain structures to encourage communities to join the program. As a result, NFIP is not able to build reserves to cover losses that exceed the historic averages. NFIP is managed by FEMA’s Federal Insurance and Mitigation Administration (FIMA), with administrative support from FEMA’s Mission Support Bureau (see fig. 1). DHS provides management direction by issuing guidance and working to integrate its various management processes, systems, and staff within and across its management areas. Around 350 FEMA employees, assisted by contractor employees, manage and oversee NFIP and the National Flood Insurance Fund, into which premiums are deposited and from which claims and expenses are paid. Their management responsibilities include establishing and updating NFIP regulations, analyzing data to determine flood insurance rates, and offering training to insurance agents and adjusters. In addition, FIMA and its program contractors are responsible for monitoring and overseeing the performance of the WYO insurance companies to help ensure that NFIP is administered properly. FIMA receives administrative and management support as well as direction on program operations from FEMA’s Mission Support Bureau offices, including the Office of the Chief Administrative Officer (OCAO), Office of the Chief Component Human Capital Officer (OCCHCO), Office of the Chief Financial Officer (OCFO), Office of the Chief Information Officer (OCIO), and Office of the Chief Procurement Officer (OCPO). In addition, FEMA’s Office of Policy and Program Analysis (OPPA) serves a collaborative support role to provide leadership, analysis, coordination, and decision-making support on agency policies, plans, programs, and key initiatives. While Mission Support and OPPA provide important services to FIMA, their responsibilities do not include comprehensive oversight of FIMA or NFIP. We found a number of management practices that could be improved to help FEMA more effectively administer NFIP. First, FEMA has not provided FIMA with strategic direction and guidance for administering NFIP and therefore lacks the starting point necessary to develop performance measures for assessing the program’s effectiveness. Second, FEMA faces a number of human capital challenges, including developing a strategic human capital plan that addresses mitigating high turnover, hiring, and overseeing contractors that play a key role in NFIP. Moreover, it has yet to adequately address managing the day-to-day operations when deploying staff to respond to federal disasters. Third, collaboration among offices within FEMA that are responsible for administering NFIP has at times been ineffective, leading to challenges in effectively carrying out some key functions. In particular, FIMA, the office that administers NFIP, and FEMA Mission Support, which provides mission-critical functions such as information technology (IT), acquisition, and financial management, have had difficulties collaborating on these functions. Finally, FEMA does not have a comprehensive set of policies, procedures, and systems to guide its operations. Specifically, it lacks an updated records management policy, procedures to effectively manage unliquidated obligations, and a fully developed and implemented documentation of its business processes. FEMA has begun taking steps to improve its acquisition management and document some of its business processes, but as they were recently implemented or still in progress, the results of these efforts have yet to be realized. Unless it takes further steps to address these management challenges, FEMA will be limited in its ability to manage NFIP’s operations or ensure program effectiveness. FEMA published its most recent agencywide strategic plan in February 2011, but the plan did not clearly lay out how and where NFIP’s mission and activities fit within FEMA’s own goals and objectives. The Government Performance and Results Act of 1993 (GPRA) requires agencies to submit a strategic plan containing a number of components, including a comprehensive mission statement, long-term goals and objectives for major operations, and strategies for achieving these goals and objectives. Further, we have reported that an agency’s strategic planning effort is the most important element in results-oriented management and serves as the foundation for defining what the agency seeks to accomplish, identifying strategies to achieve desired results, and determining how well it succeeds in reaching its goals and objectives. Leading results-oriented organizations focus on the dynamic and inclusive process of strategic planning, rather than on a strategic planning document, to provide a foundation for day-to-day activities and foster communication between the organization and its stakeholders. Moreover, the committee report accompanying GPRA stated that clear and precise goals enable an organization to maintain a consistent sense of direction regardless of the leadership changes that can occur frequently across the federal government. NFIP is a major operation with $1.2 trillion in coverage and $17.8 billion in debt that has remained on GAO’s high-risk list since 2006. FEMA officials told us that FEMA chose not to prescribe goals and objectives for specific programs in its strategic plan as required by GPRA. They said that the agency chose a different strategic approach that would allow for more flexibility, something that was needed because FEMA must respond to emergencies as they occur. While FEMA may require flexibility in its operating environment, as a federal insurance program NFIP requires a more structured framework to help ensure that its operations are properly managed and allow for the development of effective performance measures. Unless FEMA provides FIMA with strategic direction and guidance for administering NFIP, the program risks not having a strategic focus that is aligned with agency goals and objectives or effective performance measures. FIMA officials told us they were in the process of developing a strategy for mitigation and insurance but did not provide a specific timeline for completing or implementing it and did not provide details of what it might include. FIMA officials said they began developing the strategy in June 2010 and had created a steering committee with about 15 members representing various areas within FIMA. The committee held a summit with a number of stakeholders in November 2010 to validate the proposed mission, goals, and objectives of the organization before entering the drafting process and expect to eventually publish the final strategy in the summer of 2011. Because these efforts have not yet been completed, whether the strategy will include adequate goals and objectives for administering and managing NFIP remains to be seen. Without goals and objectives and a firm timeline for completing them, NFIP will continue to lack a strategic direction. FIMA officials said they had relied on other documents for strategic guidance, including FEMA- and DHS-level guidance and the agency’s general mission—managing risks from all natural hazards to help free America from the burden of such disasters. However, without specific agency- or program-level goals, FIMA cannot ensure that any performance measures it develops for NFIP properly and adequately measure the program’s success. According to GPRA, agencies should establish performance indicators to be used in measuring and assessing the relevant outputs, service levels, and outcomes of each program activity. Moreover, GAO’s Standards for Internal Control in the Federal Government states that management should ensure that agencies establish and review performance measures and indicators. As we have reported, performance goals and measures that successfully address important and varied aspects of program performance are key to a results-oriented work environment. Measuring performance allows organizations to track the progress they are making toward their goals and gives managers critical information on which to base decisions for improving their programs. We have also reported that successful performance measures are, among other things, linked to core program activities. FIMA officials said that in recent years they had generally relied on five performance measures for NFIP that they reviewed quarterly: Percentage of the U.S. population (excluding territories) covered by local hazard mitigation plans that had been approved or were pending adoption.