Featured Product

    OCC Publishes Semiannual Risk Perspective for Fall 2019

    December 09, 2019

    OCC published the Semiannual Risk Perspective for Fall 2019. The report covers risks facing national banks and federal savings associations based on data as of June 30, 2019. In this issue, operational, credit, and interest rate risks are among the key themes for the federal banking system. The report also highlights cyber-security and technology management as a special topic in emerging risks.

    The report focuses on issues that pose threats to the financial institutions regulated by OCC. It report covers information on operating environment of banks, bank performance, special topics in emerging risks, trends in key risks, and supervisory actions to address issues. According to the report, financial performance of banks is sound, partly because of a favorable credit environment and the longest economic expansion in U.S. history. Asset quality is strong and stable while leverage and risk-based capital ratios are at record levels, providing strong loss-absorption capacity. The following are the key highlights from the report:

    • Operational risk is elevated, as banks adapt to a changing and increasingly complex operating environment. Key drivers elevating operational risk include the need to adapt and evolve current technology systems for ongoing cyber-security threats.
    • Credit risk accumulated in many portfolios. Banks should prepare for a cyclical change while credit performance remains strong. Preparation includes maintaining robust credit control functions, particularly credit review, problem-loan identification, and workout, collections and collateral management.
    • Recent volatility in market rates led to increasing levels of interest rate risk. The complexity of asset-liability management is exacerbated by the recent yield curve inversions.
    • The London Interbank Offered Rate (LIBOR) will likely cease to be an active index by the end of 2021. Accordingly, OCC is increasing regulatory oversight of this area to evaluate bank awareness and preparedness.
    • Banks face strategic risks from non-depository financial institutions, use of innovative and evolving technology, and progressive data analysis capabilities.

    The report highlights that cyber-security continues to be a key concern as breaches and operational outages occur across all industries, including the financial sector. Banks generally have appropriate controls for operational stability and protection of bank and customer data. Banks strengthened risk management processes and controls to address concerns. As a result, cyber-security-related issues have decreased and have remained relatively stable over recent quarters, reflecting increasing maturity of banks’ cyber-security programs. However, cyber-security remains a significant risk area for banks, with opportunities for further improvement.

    In the special feature on cyber-security, OCC emphasizes that the cyber-security program of a bank should be part of an overall operational resilience framework. In addition to a well-documented and comprehensive incident response program, banks should consider partnering with the Financial Services Information Sharing and Analysis Center to share threat information and self-reporting incidents through the Federal Bureau of Investigation’s Internet Crime Complaint Center. Also, banks may be required to file Suspicious Activity Reports (SAR) with the Financial Crimes Enforcement Network for certain cyber events resulting in fraud. As institutions increasingly rely on third parties to help reduce costs and enhance technological capabilities, they should have processes to ensure that cyber-security controls are appropriate for the outsourced operations.


    Related Links

    Keywords: Americas, US, Banking, Operational Risk, Credit Risk, Interest Rate Risk, LIBOR, Semiannual Risk Perspective, Cyber Risk, OCC

    Related Articles

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    FSB and NGFS Publish Initial Findings from Climate Scenario Analyses

    The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.

    November 15, 2022 WebPage Regulatory News

    FSB Issues Reports on NBFI and Liquidity in Government Bonds

    The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.

    November 14, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    EU Finalizes Rules Under Crowdfunding Service Providers Regulation

    The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.

    November 08, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8596