OCC issued Bulletin 2019-37 to inform national banks, federal savings associations, and federal branches and agencies (collectively, banks) of sound fraud risk management principles. This bulletin supplements other OCC and interagency issuances on corporate and risk governance, including the references listed in appendix A of the bulletin. Fraud risk management principles can be implemented in a variety of ways and may not always be structured within a formal fraud risk management program. Regardless of the structure, fraud risk management should be commensurate with the risk profile of a bank.
The bulletin highlights that banks with significant and far-reaching retail-oriented business activities should have well-documented fraud risk management programs with appropriate monitoring, measurements and reporting, and mitigation. The risk management principles addressed in the bulletin include the following:
- A bank should have sound corporate governance practices that instill a corporate culture of ethical standards and promote employee accountability.
- A bank’s risk management system should include policies, processes, personnel, and control systems to effectively identify, measure, monitor, and control fraud risk consistent with the size, complexity, and risk profile of a bank.
- A bank’s risk management system and system of internal controls should be designed to prevent and detect fraud and to appropriately respond to fraud, suspected fraud, or allegations of fraud.
- Bank management should assess the likelihood and impact of potential fraud schemes and use the results of this assessment to inform the design of the bank’s risk management system.
- Senior management and the board of directors should measure, monitor, and understand fraud losses across the enterprise and employ tools that appropriately quantify and assess loss experience and exposure.
- Control reviews and audits should include fraud risk as part of their assessments.
Related Link: OCC Bulletin 2019-37
Keywords: Americas, US, Banking, Operational Risk, Governance, Bulletin 2019-37, Fraud Risk, OCC
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