FINANCIAL CONTINGENCY PLANNING
Introduction
The fact that successful cyber-attacks have been launched in technology education and processes suggest that there is a considerable cyber-security gap, and therefore, the Department of Homeland Security (DHS) is required to carry out appropriate actions to fill such gap. Some of the possible actions which can be taken to address the cyber-security gap are not limited to; provision of the appropriate resources, facilitating technological developments, process changes as well as ensuring coordinated partnership between the federal government and the private sector. This discussion will mainly focus on funding, as one of the ways of availing the appropriate resources for filling the cyber-security gap. In financial contingency planning, the paper will evaluate possible sources of revenue, temporary assistance, as well as funding assets. Sources of funds to be considered include; Public-private partners, Community-based organizations (nonprofit), Bond issuance, Grants, and Multi-level government financing. Other factors to consider will be effects of taxation, the role of financial efficiency in the process of funding at the state and local levels and ways in which I would identify sources of funds for the project.
Possible Sources Of Revenue
Public-private partners
Under this source, the federal government collaborates with the private sector to provide the required funds for addressing the cyber-security issue. The method is crucial for ensuring that projects have been completed within the scheduled time. The partnership covers about 20 to 30 years or more, where the private sector is required to partly towards the project. Upon completion, the public or other the beneficiaries of the DHS cyber-security will have to repay the private partners their invested funds. The funding is said to benefit both parties; the public and the private sector, through the provision of better services and operational efficiency. The greatest risk is unavailability of the private parties to offer partial financial support (White & Moody, 2015).
Community-based organizations (nonprofit)
The DHS can request funding from the Community-based organizations. These organizations usually operate at local levels and aim at improving the lives of the affected individuals. Cyber-security is a concern of every member of the community, based on the potential adverse consequences. The organizations provide the funds for free, as they are not in the process of making profits, hence the most significant advantage associated with the source.
Bond issuance
A bond represents a debt instrument. In this case, the federal government will be in the process of obtaining funds from the public, to finance the cyber-security gap. The bonds are presented at the public at different denominations, hence giving members of the public chances opportunities of purchasing bonds that are convenient to them (Borisova et al., 2015). The government will be required to repay the face value at the expiry of the agreed bond period, in addition to periodic interest payments at agreed rates. Although a reliable source of funding, it is costly because of the periodical interest repayment. Besides, the source is subject to various risks. There is currency risk, which means that the investors may get less value than anticipated in case of currency value of currencies. The bonds are also subject to changes in inflation and interest rates. The federal government can also incur losses; in the event, the changes favor the investors.
Grants
DHS can also consider applying for grants from the federal government, businesses, nonprofit entities, institutions, and capable individuals. The greatest benefit of grants is that they are non-repayable (provide free funds). Challenges are experienced in the process of searching for parties willing to offer such grants. In most cases, they provide limited amounts of money and dictate their usage.
Multi-level government financing
This form of financing involves government from all levels; the federal government, state government, and local governments. The governments have got the role of protecting their citizens from cyber-attacks and improving their general wellbeing. Considering the fact such cyber security is a national issue, sending funding applications to al government levels posses a high chance of securing the required finances.
Temporary assistance
Many organizations and institutions offer temporary assistance to others in times of difficulties. The DHS can seek temporal help from willing and capable organizations, including the federal government, to acquire funds which will help in filling the cyber-security gap. Even if the assistance may not fund the project entirely, it will have boosted the efforts financially.
Funding assets
In this case, the Department of Homeland Security (DHS) will be required to issue its assets as collateral security, to get funds from financial institutions and individual lenders. In the case of default, the lenders will compensate themselves using the pledged assets. The Department should have assets worthy the required money value, and have proper plans in which the money will be repaid, to avoid losing its assets (White & Moody, 2015).
effects of taxation
Generally, taxation has got the effect of reducing the available funds, as a certain percentage has to be diverted from financing the project to the government. However, considering the sources of funding inn our case, taxation will not have any effect, given that they are not subject to taxation. However, in the event of grants and Community-based organizations, amounts gained more than what is required, can be taxed (Brownlee, 2016).
Role of financial efficiency in funding at the state and local levels
Concerning funding, financial efficiency entails obtaining the required funds at the lowest costs possible. Accessing money from both state and local levels is not always, considering the bureaucracy and lengthy processes involved. Such bottle-necks increase the costs of obtaining the funds and may result in financial losses at the end. Financial efficiency is crucial in ensuring no losses are incurred in the process of getting the required funds. Incurring high financial costs will affect project funding adversely.
Identifying sources of funds for the project
Effective funding demands for rational decisions. Individuals and organizations are required to consider funding sources that have got favorable terms and conditions relating to interest rates charged, repayment period, processing costs, the ready availability of the required funds, etc. In the case of financing the cyber-security gap, I suggest the use or combination of grants, Community-based organizations (nonprofit), temporary assistance, and Multi-level government financing. Such sources are cheap as no interest rates charged and no repayment. Going to the cheapest sources of finances leads to financial efficiency, hence successful execution of the project under consideration.
Conclusion
DHS requires funds to fund its project of improving the cyber-security. There are numerous sources of funds available to the department, but there is a need to select the most appropriate sources. Some of the sources available the department include; Public-private partners, Community-based organizations (nonprofit), Bond issuance, Grants, Multi-level government financing, asset financing, and temporary assistance. Some of the sources such as Public-private partners, Bond issuance and asset financing attract interests, and the face value is repayable. Others like grants, Community-based organizations (nonprofit), temporary assistance, and Multi-level government financing are free. The department should consider free sources and no repayment, to decrease the costs of obtaining the funds. Taxation reduces the available funds, but in this case, it will not affect the funding of the project.
References
Borisova, G., Foal, V., Holland, K., & Megginson, W. L. (2015). Government ownership and the cost of debt: Evidence from government investments in publicly traded firms. Journal of Financial Economics, 118(1), 168-191. Available at: https://econpapers.repec.org/article/eeejfinec/v_3a118_3ay_3a2015_3ai_3a1_3ap_3a168-191.htm
Brownlee, W. E. (2016). Federal Taxation in America. Cambridge University Press.
White, P. A., & Moody, K. (2015). 7 Sources of Funding. In Roads and Ecological Infrastructure-Concepts and Applications for Small Animals. (pp. 131-139). Johns Hopkins University Press Baltimore, Maryland.