BUILDING FARM CREDIT REPUTATION RISK CAPABILITIES JERRY LEHNERTZ, CHIEF CREDIT OFFICER AGRIBANK

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1 BUILDING FARM CREDIT REPUTATION RISK CAPABILITIES JERRY LEHNERTZ, CHIEF CREDIT OFFICER AGRIBANK

2 Building on Success One Mission, Many Voices

3 REPUTATION RISK

4 Importance of Farm Credit s Reputation With a new Administration and uncertainty in the agriculture markets, FCS voice must be consistent and strong We are mission focused and need policy-makers to have a positive, lasting impression of our ability to fulfill our mission. To influence Capitol Hill, we will use a simple but powerful strategy: tell the Farm Credit story through the lens of our customers, employees and directors. By exposing key policy-makers to stories that illustrate FCS mission to support rural communities and agriculture, we will raise awareness and strengthen our reputational capital.

5 What Is Reputation Risk? Reputation Risk is the risk of losses that might result from damage to an organization s reputation, such as lost revenue; increased operating, capital and/or regulatory costs Many types of events can impact an organization s reputation and cause these losses, not all of which are the organization s own fault Unfortunately, as we all know, there is no actual court of public opinion, so winning a positive PR judgment after being falsely accused is more difficult than in a legal fight

6 Why Reputation Risk at FCS? As the Farm Credit System has grown in prominence, our critics have increased their challenges to our mission and our reputation of supporting rural communities and agriculture. As a result, it has become increasingly important that FCS leadership clearly and consistently articulate what the Farm Credit System is and why it is necessary. Moreover, it is paramount to identify and manage risks that may threaten our reputation.

7 Managing Farm Credit s Reputation Risk Manage it like every other risk Congress, Regulators and Investors MUST understand: Who we are What we do Why it s important To know us is to love us We need to tell our story to make sure we are successful in business and that Congress understands and believes we are needed and supports us and our authorities Protecting Farm Credit s Mission Support rural communities and agriculture with reliable, consistent credit and financial services today and tomorrow.

8 HOW REPUTATION RISK WORKS

9 Our Reputation Risk Framework Congress Voters Ratings Agencies Regulators Stakeholders Competitors Mission Tools News Media Other GSEs Selling Group Members GSE Debt Market Operating Authorities Tax Status News Media Customers Regulators Controllers Criteria Influencers Risk Events Congress Administration Mitigation Other Regulators Stakeholders News Media Customers

10 We Are ALL Farm Credit Each FCS Bank Each FCS Association Farm Credit Council FFCB Funding Corporation FCA Presidents Planning Committee FCS Coordinating Committee

11 BUILDING CAPABILITY RRAP WORKGROUP

12 RRAP Workgroup Charter Reputation Risk Analysis and Planning (RRAP) Workgroup In an effort to enhance Farm Credit reputation risk capabilities, the Business Practices Committee, in cooperation with the Farm Credit Council, has created a workgroup designed to identify and analyze reputational risks to Farm Credit and recommend specific plans to mitigate those risks.

13 Cross-Functional/Geo. Representation Chair: Debbie Wing, EVP of Communications (Farm Credit Council) Credit 1. Jerry Lehnertz, Chief Credit Officer (AgriBank) Lending 2. Roger Murray, EVP, Commercial Lending & Capital Markets (Farm Credit East) 3. Jay Stewart, Chief Lending Officer (Capital Farm Credit) 4. Zack Purvis, Chief Lending Officer (AgGeorgia) Legal 5. Mashenka Lundberg, General Counsel (CoBank) Marketing & Communications 6. Linda Hendricksen, SVP, Marketing & Public Affairs (NW FCS) 7. Judy Hartlieb, VP, PR & Marketing (FCSA/Frontier) Finance 9. Dan Wagner, EVP Chief Operating Officer (Mid-America) 10. Regina Gill, SVP, Investor Relations (Funding Corp) 11. Luis Sahmkow, VP & Treasurer (AgriBank) IT/Cyber 12. Chad Toney, Chief Information Security Officer (AgFirst) Risk Management 13. Rob Crain, Chief Risk Officer (Carolina Farm Credit) 14. Bill Noland, Chief Operating Officer (Farm Credit West) Public/Gov t Affairs 15. Stan Ray, Chief Administrative Officer (FCB of TX) Crisis Communications 8. Dave DenHerder, Partner (FP1 Strategies)

14 RRAP Workgroup Responsibilities

15 REPUTATIONAL RISK ASSESSMENT

16 Reputational Risk Events / Scenarios Risk Management Gaps Internal Controls Fraud, Ethics Financial Disclosure, Reporting Business Practices Mission Interpretation Relevance Critical System Reputation Event Why do we need the Farm Credit System Cybersecurity Data breach or Denial of Service attack

17 What We ve Learned Our best defense is a good offense. Reputation management must be both proactive AND reactive Defense: Preparation and crisis management Offense: Ongoing communications and campaigns It s NOT about any SINGLE reputation risk: Our formal System-wide Risk Analysis ranks four types of Reputation Risk as the top four risks facing the System Biggest concern: when a series of events bring more than one of these risks to the attention of Congress, our Investors, or our Regulator Communications needs-to-know to be effective Informal: We rely on informal networks for information-sharing Formal: We need to improve communication BOTH ways from local associations to FCC and from FCC to local associations

18 BUILDING CAPABILITY CRISIS PLANNING

19 Crisis Communications Principles Ensure the full FCS is represented during a crisis response Develop the groundwork for a strong crisis communications infrastructure Build a turn-key process for FCS-wide activation and response should a crisis occur Assure employees, customer owners, board members, community members and key stakeholders (particularly members of Congress and Regulators) that FCS will respond with speed and transparency Control the narrative Be present

20 Crisis Communications App The most up-to-date national crisis communications plan has been placed on the new Farm Credit Crisis Communications App (In Case of Crisis) Additionally, the App allows for sharing of documents and coordinating communications The App will be used only for crisis events or testing to maintain its significance

21 Crisis Planning Infrastructure

22 Thank You