The Risk Management Flash - Vol 2 Issue 3

A summary of risk management developments for regional and community financial institutions

Topics Covered in this Issue
  • OCC Semi-Annual Risk Perspectives
  • OCC Supervision Platform
  • GAO Review
  • Fed Supervision & Regulation Report
  • OCC Innovation Pilot Program
  • Final Rule Issued Reducing Call Report Burden for Small Banks
  • Fed Control Framework
  • FBO Prudential Standards
  • Technology Service Provider Contracts
  • FDIC Performance Plan
  • FDIC Supervisory Insights
  • FFIEC Policy Statement on The Report of Examination
  • SEC Appoints First Chief Risk Officer
  • SEC SOX Relief for Small Firms
  • RTP Network Payment Principles
  • ABA Risk Management Conference Update
  • Bank Director Audit & Risk Committee Conference Update
OCC Semi-Annual Risk Perspectives

According to the recently issued Office of the Comptroller of the Currency’s (OCC) Semiannual Risk Perspective, banks continue to show strong asset quality, capital and liquidity and earnings amid positive economic conditions. However, banks should remain vigilant about underlying credit and liquidity risks that could begin to emerge. Operational risk remains elevated due to increasing and evolving cyber threats to financial institutions and third-party systems, innovation in financial products and services, and increasing reliance on third-party service providers for technology and operational support. The OCC states these risks underscore the need for effective change management and operational resilience when implementing new products, services and technologies, as well as maintaining existing operations (OCC Bulletin 2017-43). Strategic risk also is elevated by several drivers, including: the pace of industry change; poor business decisions; imprudent or incomplete change management plans; pressure to reduce expenses and control costs; the burden of some legacy technology systems, resource limitations; and the need for scale of operations. The report also stated that banks slow to adapt to industry changes may be exposed to increasing strategic risk. Banks should consider working on key areas, including: strengthening risk management practices, including oversight and specific accountability for enterprise risk identification, risk assessment, scenario analyses, issues management, controls and reporting. See the OCC’s Semiannual Risk Perspective: bit.ly/OCC-Semiannual-Risk-Perspective.

OCC Supervision Platform

By the end of next year, the OCC will employ a single supervisory platform instead of separate platforms for large versus community and midsize banks. The OCC also has updated the Foreword booklet of its Comptroller’s Handbook, which describes the overall organization and format of the handbook. The updated booklet replaces a previous version issued in September 2017. Read the OCC Comptroller’s Handbook updates here: bit.ly/OCC-Comptroller-Handbook.

Related Knowledge Share