Information on High Risk Areas
 
 41.1. Updating high risk areas.
 
   Information on high risk areas is required for oversight and review
 of agencies' actions to correct weaknesses or deficiencies and to
 determine funding levels.  Agencies should prepare the required
 information based on the high risk area list in the latest annual
 budget and the most recent information provided to OMB on correcting
 high risk areas. If agencies believe that management initiatives
 should be added to the high risk list, they should contact their OMB
 representative.
   (a) Materials required.--Agencies with high risk areas on the OMB
 list are required to submit the information described below on high
 risk activities for CY and BY.  Additional information may also be
 required by OMB representatives.
   An original and two copies of a schedule providing the following
 information are required, in the format of exhibit 41, for CY and BY:
   --the title of the high risk area;
   --the size of the program affected by the high risk area;
   --a brief description and, where possible, a quantification of the
     amount "at risk" (as defined below);
   --the "management investments" or funding levels for actions to
     correct high risk areas; and
   --a narrative explanation for the CY funding level and a narrative
     justification for the BY amounts.
   The schedule is required to be submitted by September 9.
   (b) Definitions.--Agencies will identify the program size, which may
 be the appropriation or funding level for the program as a whole, or
 for the system or inventory affected by the high risk area.  For
 example, for the high risk area "Medicaid Management Systems", the
 program size is the appropriation for the Medicaid program; for "DOD
 Departmental and Service Contract Administration Controls over DOD
 Property in Private Contractor Possession", the program size is the
 estimate of Federal property in possession of DOD contractors.
   Agencies will also describe the effect of the high risk problem on
 the Federal government, including, where possible, quantification of
 the amount "at risk", (i.e., the potential dollar loss associated with
 failure to address the high risk area), and a description of the
 methodology used to develop the "at risk" amount.  There is no
 standard methodology for computing amounts "at risk".  Ideally,
 agencies should report the  value of the Federal resources at risk, or
 a range or order of magnitude of the risk, if appropriate (see exhibit
 41).
   The schedule will identify management investments or funding
 included in budget estimates for corrective actions in the high risk
 areas.  For reporting purposes under this section, management
 investments are the critical, marginal funding levels needed to ensure
 that program funding is spent efficiently and effectively.
   The schedule should list by title and identification code (see
 section 20.3) the accounts that fund these management investments and
 the budget authority associated with each account.