42741Federal Register / Vol. 60, No. 158 / Wednesday, August 16, 1995 / Rules and Regulations
PART 327—ASSESSMENTS
l. The authority citation for part 327
continues to read as follows:
Authority: 12 U.S.C. 1441, 1441b, 1817–
1819.
2. Section 327.8 is amended by
adding a new paragraph (i) to read as
follows:
§ 327.8 Definitions.
* * * * *
(i) As used in § 327.9, the following
terms have the following meanings:
(1) Adjustment factor. The maximum
number of basis points by which the
Board may increase or decrease Rate
Schedule 2 set forth in § 327.9(a).
(2) Assessment schedule. The set of
rates based on the assessment risk
classifications of § 327.4(a) with a
difference of 27 basis points between
the minimum rate which applies to
institutions classified as 1A and the
maximum rate which applies to
institutions classified as 3C.
3. Section 327.9 is amended by
revising paragraph (a), removing
paragraph (b), redesignating paragraph
(c) as paragraph (d), and adding new
paragraphs (b) and (c) to read as follows:
§ 327.9 Assessment rate schedules.
(a) BIF members. Subject to § 327.4(c),
the annual assessment rate for each BIF
member other than an institution
specified in § 327.31(a) shall be the rate
in the following Rate Schedules
applicable to the assessment risk
classification assigned by the
Corporation under § 327.4(a) to that BIF
member. Until the BIF designated
reserve ratio of 1.25 percent is achieved,
the rates set forth in Rate Schedule 1
shall apply. After the BIF designated
reserve ratio is achieved, the rates set
forth in Rate Schedule 2 shall apply.
The schedules utilize the group and
subgroup designations specified in
§ 327.4(a):
RATE SCHEDULE 1
Capital group Supervisory subgroup
A B C
1 ........................ 23 26 29
2 ........................ 26 29 30
3 ........................ 29 30 31
RATE SCHEDULE 2
Capital group Supervisory subgroup
A B C
1 ........................ 4 7 21
2 ........................ 7 14 28
3 ........................ 14 28 31
(b) Rate adjustment; announcement—
(1) Semiannual adjustment. The Board
may increase or decrease Rate Schedule
2 set forth in paragraph (a) of this
section up to a maximum increase of 5
basis points or a fraction thereof or a
maximum decrease of 5 basis points or
a fraction thereof (after aggregating
increases and decreases), as the Board
deems necessary to maintain the reserve
ratio at the BIF designated reserve ratio.
Any such adjustment shall apply
uniformly to each rate in the schedule.
In no case may such adjustments result
in a negative assessment rate or in a rate
schedule that, over time, is more than 5
basis points above or below Rate
Schedule 2, nor may any one such
adjustment constitute an increase or
decrease of more than 5 basis points.
The adjustment factor for any
semiannual period shall be determined
by:
(i) The amount of assessment revenue
necessary to maintain the reserve ratio
at the designated reserve ratio; and
(ii) The assessment schedule that
would generate the amount of revenue
in paragraph (b)(1)(i) of this section
considering the risk profile of BIF
members.
(2) In determining the amount of
assessment revenue in paragraph
(b)(1)(i) of this section, the Board shall
take into consideration the following:
(i) Expected operating expenses;
(ii) Case resolution expenditures and
income;
(iii) The effect of assessments on BIF
members’ earnings and capital; and
(iv) Any other factors the Board may
deem appropriate.
(3) Announcement. The Board shall:
(i) Adopt the semiannual assessment
schedule and any adjustment thereto by
means of a resolution reflecting
consideration of the factors specified in
paragraph (c)(2)(i) through (iv) of this
section; and
(ii) Announce the semiannual
assessment schedule and the amount
and basis for any adjustment thereto not
later than 45 days before the invoice
date specified in § 327.3(c) for the first
quarter of the semiannual period for
which the adjusted assessment schedule
shall be effective.
(c) Special provisions. The following
provisions apply only with respect to
the first time the BIF designated reserve
ratio is achieved after 1994:
(1) Notwithstanding the provisions of
§ 327.3(c)(2) or § 327.3(d)(2), the
Corporation may modify the time of the
direct debit of the assessment payment
which next occurs after the Board
determines that the designated reserve
ratio has been achieved;
(2) Notwithstanding the provisions of
§ 327.7(a)(3), if, as a result of the new
rate schedule having gone into effect, an
institution has overpaid its assessment,
the Corporation shall provide interest
on any such overpayment, as follows:
(i) For the first semiannual period of
1995, beginning on the date the new rate
schedule goes into effect; and
(ii) For the second semiannual period
of 1995, beginning on the date of the
overpayment; and
(3) Notwithstanding the provisions of
§ 327.7(b)(3), the interest rate applicable
to overpayments described in paragraph
(c)(2) of this section shall be the
arithmetic average of the overnight
simple interest rates received by the
Corporation on its U.S. Treasury
investments for the period during which
the Corporation held the overpayment
amount.
* * * * *
By order of the Board of Directors.
Dated at Washington, DC, this 8th day of
August 1995.
Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.
[FR Doc. 95–20170 Filed 8–15–95; 8:45 am]
BILLING CODE 6714–01–P
12 CFR Part 327
RIN 3064–AB59
Assessments; Retention of Existent
Assessment Rate Schedule for SAIF-
Member Institutions
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
SUMMARY: This final rule retains the
existing assessment rate schedule
applicable to members of the Savings
Association Insurance Fund (SAIF). The
effect of this final rule is that the SAIF
assessment rates to be paid by
depository institutions whose deposits
are subject to assessment by the SAIF
will continue to range from 23 cents per
$100 of assessable deposits to 31 cents
per $100 of assessable deposits,
depending on risk classification.
EFFECTIVE DATE: This final rule becomes
effective September 15, 1995.
FOR FURTHER INFORMATION CONTACT:
James R. McFadyen, Senior Financial
Analyst, Division of Research and
Statistics, (202) 898–7027, or Valerie
Jean Best, Counsel, Legal Division, (202)
898–3812, Federal Deposit Insurance
Corporation, Washington, D.C. 20429.
SUPPLEMENTARY INFORMATION: The Board
of Directors of the FDIC (Board) is
retaining the existing assessment rate
PART 327—ASSESSMENTS
l. The authority citation for part 327
continues to read as follows:
Authority: 12 U.S.C. 1441, 1441b, 1817–
1819.
2. Section 327.8 is amended by
adding a new paragraph (i) to read as
follows:
§ 327.8 Definitions.
* * * * *
(i) As used in § 327.9, the following
terms have the following meanings:
(1) Adjustment factor. The maximum
number of basis points by which the
Board may increase or decrease Rate
Schedule 2 set forth in § 327.9(a).
(2) Assessment schedule. The set of
rates based on the assessment risk
classifications of § 327.4(a) with a
difference of 27 basis points between
the minimum rate which applies to
institutions classified as 1A and the
maximum rate which applies to
institutions classified as 3C.
3. Section 327.9 is amended by
revising paragraph (a), removing
paragraph (b), redesignating paragraph
(c) as paragraph (d), and adding new
paragraphs (b) and (c) to read as follows:
§ 327.9 Assessment rate schedules.
(a) BIF members. Subject to § 327.4(c),
the annual assessment rate for each BIF
member other than an institution
specified in § 327.31(a) shall be the rate
in the following Rate Schedules
applicable to the assessment risk
classification assigned by the
Corporation under § 327.4(a) to that BIF
member. Until the BIF designated
reserve ratio of 1.25 percent is achieved,
the rates set forth in Rate Schedule 1
shall apply. After the BIF designated
reserve ratio is achieved, the rates set
forth in Rate Schedule 2 shall apply.
The schedules utilize the group and
subgroup designations specified in
§ 327.4(a):
RATE SCHEDULE 1
Capital group Supervisory subgroup
A B C
1 ........................ 23 26 29
2 ........................ 26 29 30
3 ........................ 29 30 31
RATE SCHEDULE 2
Capital group Supervisory subgroup
A B C
1 ........................ 4 7 21
2 ........................ 7 14 28
3 ........................ 14 28 31
(b) Rate adjustment; announcement—
(1) Semiannual adjustment. The Board
may increase or decrease Rate Schedule
2 set forth in paragraph (a) of this
section up to a maximum increase of 5
basis points or a fraction thereof or a
maximum decrease of 5 basis points or
a fraction thereof (after aggregating
increases and decreases), as the Board
deems necessary to maintain the reserve
ratio at the BIF designated reserve ratio.
Any such adjustment shall apply
uniformly to each rate in the schedule.
In no case may such adjustments result
in a negative assessment rate or in a rate
schedule that, over time, is more than 5
basis points above or below Rate
Schedule 2, nor may any one such
adjustment constitute an increase or
decrease of more than 5 basis points.
The adjustment factor for any
semiannual period shall be determined
by:
(i) The amount of assessment revenue
necessary to maintain the reserve ratio
at the designated reserve ratio; and
(ii) The assessment schedule that
would generate the amount of revenue
in paragraph (b)(1)(i) of this section
considering the risk profile of BIF
members.
(2) In determining the amount of
assessment revenue in paragraph
(b)(1)(i) of this section, the Board shall
take into consideration the following:
(i) Expected operating expenses;
(ii) Case resolution expenditures and
income;
(iii) The effect of assessments on BIF
members’ earnings and capital; and
(iv) Any other factors the Board may
deem appropriate.
(3) Announcement. The Board shall:
(i) Adopt the semiannual assessment
schedule and any adjustment thereto by
means of a resolution reflecting
consideration of the factors specified in
paragraph (c)(2)(i) through (iv) of this
section; and
(ii) Announce the semiannual
assessment schedule and the amount
and basis for any adjustment thereto not
later than 45 days before the invoice
date specified in § 327.3(c) for the first
quarter of the semiannual period for
which the adjusted assessment schedule
shall be effective.
(c) Special provisions. The following
provisions apply only with respect to
the first time the BIF designated reserve
ratio is achieved after 1994:
(1) Notwithstanding the provisions of
§ 327.3(c)(2) or § 327.3(d)(2), the
Corporation may modify the time of the
direct debit of the assessment payment
which next occurs after the Board
determines that the designated reserve
ratio has been achieved;
(2) Notwithstanding the provisions of
§ 327.7(a)(3), if, as a result of the new
rate schedule having gone into effect, an
institution has overpaid its assessment,
the Corporation shall provide interest
on any such overpayment, as follows:
(i) For the first semiannual period of
1995, beginning on the date the new rate
schedule goes into effect; and
(ii) For the second semiannual period
of 1995, beginning on the date of the
overpayment; and
(3) Notwithstanding the provisions of
§ 327.7(b)(3), the interest rate applicable
to overpayments described in paragraph
(c)(2) of this section shall be the
arithmetic average of the overnight
simple interest rates received by the
Corporation on its U.S. Treasury
investments for the period during which
the Corporation held the overpayment
amount.
* * * * *
By order of the Board of Directors.
Dated at Washington, DC, this 8th day of
August 1995.
Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.
[FR Doc. 95–20170 Filed 8–15–95; 8:45 am]
BILLING CODE 6714–01–P
12 CFR Part 327
RIN 3064–AB59
Assessments; Retention of Existent
Assessment Rate Schedule for SAIF-
Member Institutions
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
SUMMARY: This final rule retains the
existing assessment rate schedule
applicable to members of the Savings
Association Insurance Fund (SAIF). The
effect of this final rule is that the SAIF
assessment rates to be paid by
depository institutions whose deposits
are subject to assessment by the SAIF
will continue to range from 23 cents per
$100 of assessable deposits to 31 cents
per $100 of assessable deposits,
depending on risk classification.
EFFECTIVE DATE: This final rule becomes
effective September 15, 1995.
FOR FURTHER INFORMATION CONTACT:
James R. McFadyen, Senior Financial
Analyst, Division of Research and
Statistics, (202) 898–7027, or Valerie
Jean Best, Counsel, Legal Division, (202)
898–3812, Federal Deposit Insurance
Corporation, Washington, D.C. 20429.
SUPPLEMENTARY INFORMATION: The Board
of Directors of the FDIC (Board) is
retaining the existing assessment rate
42742 Federal Register / Vol. 60, No. 158 / Wednesday, August 16, 1995 / Rules and Regulations
1 60 FR 9266 (Feb. 16, 1995).
2 60 FR 9270 (Feb. 16, 1995).
schedule applicable to members of the
SAIF. The order of discussion under
this caption is as follows. The proposed
rule to retain the existing assessment
rate schedule for SAIF-member
institutions is outlined in Section I. The
final rule adopted by the Board through
this rulemaking procedure is described
in Section II. The statutory provisions
governing SAIF assessment rates are
summarized in Section III. Next, a
detailed description of the problems
confronting the SAIF is set forth in
Section IV. The comment letters
received in response to the proposed
rule are analyzed under the caption
‘‘Comment Summary’’, and the FDIC’s
response to the comments is set forth
under the caption ‘‘Adoption of Final
Rule’’.
Background
I. Introduction; The SAIF Assessment-
Rate Proposal
The Board has the legal authority to
reduce SAIF assessment rates to a
minimum average of 18 basis points
until January 1, 1998. Beginning January
1, 1998, the minimum average rate must
be 23 basis points until SAIF achieves
its designated reserve ratio (DRR) of 1.25
percent of estimated insured deposits.
Based upon the results of its semiannual
review of the capitalization of the SAIF
and of the SAIF assessment rates, the
Board was inclined to retain the existing
assessment rate schedule applicable to
SAIF-member institutions for the
second semiannual assessment period of
1995 so that capitalization of the SAIF
is accomplished as soon as possible.
The FDIC wished to have the benefit
of public comment before ending its
review for the period, however.
Therefore, on February 16, 1995, the
Board published a proposed rule to
retain the existing assessment rate
schedule applicable to members of the
SAIF.1 The Board requested comment
on all aspects of the proposed rule. At
the same time, the Board published a
proposed rule to decrease the
assessment rate schedule for members of
the Bank Insurance Fund (BIF) to a
range of 4–31 basis points, depending
on risk classification, when the reserve
ratio of the BIF attains the minimum
DRR of 1.25 percent of estimated
insured deposits.2
The Board held a hearing at FDIC
headquarters in Washington, D.C. on
March, 17, 1995 to provide opportunity
for interested parties to express orally
their views on the proposals to decrease
assessment rates for members of the BIF
while retaining the 23–31 basis point
assessment schedule for members of the
SAIF. Every person or organization that
requested an opportunity to testify was
accommodated.
A total of twenty witnesses were
heard by the full Board during the day-
long hearing. They included the Savings
Association Insurance Fund Industry
Advisory Committee, the American
Bankers Association, the Independent
Bankers Association of America,
America’s Community Bankers, the
National Association of Home Builders,
several bank or thrift associations,
individual bank and thrift executives,
consumer organizations, a private sector
attorney and an independent consultant.
The written testimony of each witness
as well as the hearing record were
included in the FDIC’s public comment
file on the two proposals.
The public comment period for both
proposals expired on April 17, 1995.
The Board received a combined total of
over 3,200 comment letters including
testimony from the public hearing. After
taking into account duplicate letters
submitted by the same commenter,
2,891 comments were tabulated
representing 2,310 individual BIF
member respondents, 454 individual
SAIF member respondents, 61 trade
associations and 66 other individuals/
organizations. Comments concerning
the BIF proposal are discussed in a
separate final rule governing BIF
assessment rates published elsewhere in
this Federal Register.
As detailed in the Comment Summary
below, thrifts commenting on the SAIF
proposal uniformly asked that the
impending disparity between premiums
assessed against the banking industry
and the thrift industry be reduced or
eliminated. A significant number of
SAIF members stated, however, that a
reduction in SAIF assessment rates to
the minimum authorized by current law
would not resolve the long-term
challenges facing SAIF. They noted that,
among other things, draws on the SAIF
by the Financing Corporation (FICO)
would continue to undermine the SAIF.
Many of these commenters urged
legislative action, stating that ‘‘the
Congress must act decisively to defuse
the coming crisis of the SAIF’’. The
legislative initiatives suggested by the
various commenters require
Congressional action and were not part
of the assessment-rate proposals.
Nonetheless, these initiatives are
included in the Comment Summary in
an effort to present a complete review of
the comments received by the FDIC and
in recognition of the significant number
of letters that offered comments on such
initiatives.
II. Description of Final Rule
After considering the comments
received in response to the proposed
rule and other relevant information, the
Board has determined to retain the
existing assessment rate schedule
applicable to members of the SAIF. As
a result of this action, the SAIF
assessment rate to be paid by
institutions whose deposits are subject
to assessment by the SAIF will continue
to range from 23 cents per $100 of
assessable deposits to 31 cents per $100
of assessable deposits, depending on
risk classification.
Despite the general good health of the
thrift industry, the SAIF is not in good
condition and its prospects are not
favorable. The issues confronting the
SAIF are discussed in detail under
Section IV. To summarize, the SAIF is
significantly undercapitalized. On
March 31, 1995, the SAIF had a balance
of $2.2 billion, or about 31 cents in
reserves for every $100 in insured
deposits. An additional $6.6 billion
would have been required on that date
to fully capitalize the SAIF to its DRR
of 1.25 percent of estimated insured
deposits. At the current pace, and under
reasonably optimistic assumptions, the
SAIF would not reach the statutorily
mandated DRR until at least the year
2002. Moreover, the SAIF became
responsible for resolving failed thrifts
on July 1, 1995. The failure of a single
large SAIF-insured institution or several
sizeable institutions or an economic
downturn leading to higher than
anticipated losses could render the fund
insolvent. While the FDIC is not
currently predicting such thrift failures,
they are possible.
The main source of income for the
SAIF is assessments. A sizable portion
of the SAIF’s ongoing assessments is
diverted to meet interest payments on
obligations of the FICO. Reducing the
minimum average rate to 18 basis points
is presently projected to delay SAIF
capitalization until 2005, and it would
cause a FICO shortfall as early as 1996.
Moreover, there will still be a significant
differential between BIF and SAIF
assessment rates even if the Board
reduces the SAIF assessments to the
minimum average allowed by statute.
III. Statutory Provisions Governing SAIF
Assessment Rates
A. Section 7 of the Federal Deposit
Insurance Act
Section 7(b) of the Federal Deposit
Insurance Act (FDI Act) governs the
Board’s authority for setting assessments
for SAIF members. 12 U.S.C. 1817(b).
Section 7(b)(1)(A) and (C) require that
the FDIC maintain a risk-based
1 60 FR 9266 (Feb. 16, 1995).
2 60 FR 9270 (Feb. 16, 1995).
schedule applicable to members of the
SAIF. The order of discussion under
this caption is as follows. The proposed
rule to retain the existing assessment
rate schedule for SAIF-member
institutions is outlined in Section I. The
final rule adopted by the Board through
this rulemaking procedure is described
in Section II. The statutory provisions
governing SAIF assessment rates are
summarized in Section III. Next, a
detailed description of the problems
confronting the SAIF is set forth in
Section IV. The comment letters
received in response to the proposed
rule are analyzed under the caption
‘‘Comment Summary’’, and the FDIC’s
response to the comments is set forth
under the caption ‘‘Adoption of Final
Rule’’.
Background
I. Introduction; The SAIF Assessment-
Rate Proposal
The Board has the legal authority to
reduce SAIF assessment rates to a
minimum average of 18 basis points
until January 1, 1998. Beginning January
1, 1998, the minimum average rate must
be 23 basis points until SAIF achieves
its designated reserve ratio (DRR) of 1.25
percent of estimated insured deposits.
Based upon the results of its semiannual
review of the capitalization of the SAIF
and of the SAIF assessment rates, the
Board was inclined to retain the existing
assessment rate schedule applicable to
SAIF-member institutions for the
second semiannual assessment period of
1995 so that capitalization of the SAIF
is accomplished as soon as possible.
The FDIC wished to have the benefit
of public comment before ending its
review for the period, however.
Therefore, on February 16, 1995, the
Board published a proposed rule to
retain the existing assessment rate
schedule applicable to members of the
SAIF.1 The Board requested comment
on all aspects of the proposed rule. At
the same time, the Board published a
proposed rule to decrease the
assessment rate schedule for members of
the Bank Insurance Fund (BIF) to a
range of 4–31 basis points, depending
on risk classification, when the reserve
ratio of the BIF attains the minimum
DRR of 1.25 percent of estimated
insured deposits.2
The Board held a hearing at FDIC
headquarters in Washington, D.C. on
March, 17, 1995 to provide opportunity
for interested parties to express orally
their views on the proposals to decrease
assessment rates for members of the BIF
while retaining the 23–31 basis point
assessment schedule for members of the
SAIF. Every person or organization that
requested an opportunity to testify was
accommodated.
A total of twenty witnesses were
heard by the full Board during the day-
long hearing. They included the Savings
Association Insurance Fund Industry
Advisory Committee, the American
Bankers Association, the Independent
Bankers Association of America,
America’s Community Bankers, the
National Association of Home Builders,
several bank or thrift associations,
individual bank and thrift executives,
consumer organizations, a private sector
attorney and an independent consultant.
The written testimony of each witness
as well as the hearing record were
included in the FDIC’s public comment
file on the two proposals.
The public comment period for both
proposals expired on April 17, 1995.
The Board received a combined total of
over 3,200 comment letters including
testimony from the public hearing. After
taking into account duplicate letters
submitted by the same commenter,
2,891 comments were tabulated
representing 2,310 individual BIF
member respondents, 454 individual
SAIF member respondents, 61 trade
associations and 66 other individuals/
organizations. Comments concerning
the BIF proposal are discussed in a
separate final rule governing BIF
assessment rates published elsewhere in
this Federal Register.
As detailed in the Comment Summary
below, thrifts commenting on the SAIF
proposal uniformly asked that the
impending disparity between premiums
assessed against the banking industry
and the thrift industry be reduced or
eliminated. A significant number of
SAIF members stated, however, that a
reduction in SAIF assessment rates to
the minimum authorized by current law
would not resolve the long-term
challenges facing SAIF. They noted that,
among other things, draws on the SAIF
by the Financing Corporation (FICO)
would continue to undermine the SAIF.
Many of these commenters urged
legislative action, stating that ‘‘the
Congress must act decisively to defuse
the coming crisis of the SAIF’’. The
legislative initiatives suggested by the
various commenters require
Congressional action and were not part
of the assessment-rate proposals.
Nonetheless, these initiatives are
included in the Comment Summary in
an effort to present a complete review of
the comments received by the FDIC and
in recognition of the significant number
of letters that offered comments on such
initiatives.
II. Description of Final Rule
After considering the comments
received in response to the proposed
rule and other relevant information, the
Board has determined to retain the
existing assessment rate schedule
applicable to members of the SAIF. As
a result of this action, the SAIF
assessment rate to be paid by
institutions whose deposits are subject
to assessment by the SAIF will continue
to range from 23 cents per $100 of
assessable deposits to 31 cents per $100
of assessable deposits, depending on
risk classification.
Despite the general good health of the
thrift industry, the SAIF is not in good
condition and its prospects are not
favorable. The issues confronting the
SAIF are discussed in detail under
Section IV. To summarize, the SAIF is
significantly undercapitalized. On
March 31, 1995, the SAIF had a balance
of $2.2 billion, or about 31 cents in
reserves for every $100 in insured
deposits. An additional $6.6 billion
would have been required on that date
to fully capitalize the SAIF to its DRR
of 1.25 percent of estimated insured
deposits. At the current pace, and under
reasonably optimistic assumptions, the
SAIF would not reach the statutorily
mandated DRR until at least the year
2002. Moreover, the SAIF became
responsible for resolving failed thrifts
on July 1, 1995. The failure of a single
large SAIF-insured institution or several
sizeable institutions or an economic
downturn leading to higher than
anticipated losses could render the fund
insolvent. While the FDIC is not
currently predicting such thrift failures,
they are possible.
The main source of income for the
SAIF is assessments. A sizable portion
of the SAIF’s ongoing assessments is
diverted to meet interest payments on
obligations of the FICO. Reducing the
minimum average rate to 18 basis points
is presently projected to delay SAIF
capitalization until 2005, and it would
cause a FICO shortfall as early as 1996.
Moreover, there will still be a significant
differential between BIF and SAIF
assessment rates even if the Board
reduces the SAIF assessments to the
minimum average allowed by statute.
III. Statutory Provisions Governing SAIF
Assessment Rates
A. Section 7 of the Federal Deposit
Insurance Act
Section 7(b) of the Federal Deposit
Insurance Act (FDI Act) governs the
Board’s authority for setting assessments
for SAIF members. 12 U.S.C. 1817(b).
Section 7(b)(1)(A) and (C) require that
the FDIC maintain a risk-based