Featured Product

    OCC Outlines Supervisory Strategy for 2021

    October 01, 2020

    The OCC Committee on Bank Supervision released the bank supervision operating plan for the fiscal year 2021. The plan outlines supervisory priorities and aligns with the Strategic Plan of OCC for fiscal years 2019–2023 and the priorities of the National Risk Committee. The plan provides the foundation for policy initiatives and for supervisory strategies as applied to individual national banks, federal savings associations, federal branches, federal agencies, and technology service providers. OCC will provide periodic updates about supervisory priorities through the Semiannual Risk Perspective in the Fall and Spring.

    OCC states that it may adjust supervisory strategies, as appropriate, during the fiscal year in response to the emerging risks and supervisory priorities. For fiscal year 2021, the supervisory efforts will be flexible to recognize the broad, bank-specific impact of pandemic and resulting the economic, financial, operational, and compliance implications. In addition to the baseline supervision to assign ratings, the development of supervisory strategies will focus on the following risk areas:

    • Credit risk management, given projected weaker economic conditions. Examiner focus would be on commercial and retail credit risk control functions, including portfolio administration and risk management, timely risk identification, independent loan review, risk rating accuracy, policy exception tracking, collateral valuation, stress testing, and collections/workout management.
    • Commercial and residential real estate concentration risk management, including verification that risk assessment and management practices adequately account for concentration risks. Examiner focus should include portfolios with material concentrations, especially in sectors hard hit by the pandemic.
    • Appropriateness of allowance for loan and lease losses/allowance for credit losses, forecasting the cumulative impact from a lengthy period of eased underwriting standards, and potential higher probability of default and loss given default. Examiners should focus on Current Expected Credit Losses (CECL) implementation for  institutions that have adopted the standard and CECL preparation for those that will be implementing the standard.
    • Cybersecurity and operational resilience with a focus on threat vulnerability and detection, access controls and data security, and managing third-party access. Examiners should also focus on incident response and remediation processes.
    • Compliance risk management associated with 2020 pandemic-related bank activities, such as CARES Act loan forbearance requirements or other bank-provided consumer loan or account accommodations.
    • Bank preparation for the phase-out of the London Interbank Offering Rate as a reference rate after 2021, including operational and consumer impact assessments and change management related to implementation and disclosure of an alternative index for pricing loans, deposits, and other products and services.
    • Proper oversight of significant third-party relationships, including partnerships. Examiners should identify where those relationships represent significant concentrations in operations, bank resiliency, or other risks. and should assess risk oversight of third party’s own management of cybersecurity and resilience risks.
    • Change management over significant operational changes. Examiners should evaluate governance over new technology innovation and implementation, including use of cloud computing, artificial intelligence, digitalization in risk management processes, new products and services, and notable changes in strategic plans. 

     

    Related Links

    Keywords: Americas, US, Banking, COVID-19, CECL, LIBOR, Cyber Risk, Credit Risk, Fintech, Operation Plan, Strategic Plan, CARES Act, Outsourcing Arrangements, OCC

    Featured Experts
    Related Articles
    News

    HKMA Publishes Hong Kong Taxonomy for Sustainable Finance

    The Hong Kong Monetary Authority (HKMA) published the Hong Kong Taxonomy for Sustainable Finance.

    May 21, 2024 WebPage Regulatory News
    News

    EU Taking Steps to Set Out and Enforce AI Regulations

    Many believe that the transformative power of generative artificial intelligence (GenAI) has potential to reshape the financial sector in the time to come.

    May 21, 2024 WebPage Regulatory News
    News

    ISSB Releases Digital Sustainability Disclosures Taxonomy

    The themes of the harmonization and interoperability of sustainability disclosure standards among various jurisdictions remain at the top-of-mind for international standard-setting bodies.

    May 21, 2024 WebPage Regulatory News
    News

    BCBS Report Studies Implications of Digitalization of Finance

    The Basel Committee on Banking Supervision (BCBS) published a report that examines the implications of the digitalization of finance for banks and supervisors.

    May 21, 2024 WebPage Regulatory News
    News

    BCBS Consults on Guidelines for Counterparty Credit Risk Management

    The Basel Committee on Banking Supervision (BCBS) is seeking comments, until August 28, 2024, on guidelines for counterparty credit risk management of banks.

    May 21, 2024 WebPage Regulatory News
    News

    BIS Paper Outlines Vision for Future Financial System

    In a recent paper, the General Manager of Bank for International Settlements (BIS) and the Indian entrepreneur (Infosys co-founder) Nandan Nilekani have laid out a vision for the Finternet, which is proposed to be a network of multiple financial ecosystems, much like the internet.

    April 29, 2024 WebPage Regulatory News
    News

    NGFS Outlines Options for Supervisory Review of Transition Plans

    The Network for Greening the Financial System (NGFS) recently published three reports on the use of transition plans to boost sustainable finance and manage climate-related financial risks.

    April 29, 2024 WebPage Regulatory News
    News

    BCBS Issues Discussion Paper on Climate Scenario Analysis

    The Basel Committee on Banking Supervision (BCBS) issued a discussion paper on the use of climate scenario analysis to strengthen the management and supervision of climate-related financial risks.

    April 29, 2024 WebPage Regulatory News
    News

    OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.

    April 25, 2024 WebPage Regulatory News
    News

    CFIT to Chair Open Finance Taskforce Announced by UK Government

    The UK government announced the formation of an industry-led Open Finance Taskforce, chaired by the Center for Finance, Innovation, and Technology (CFIT).

    April 25, 2024 WebPage Regulatory News
    RESULTS 1 - 10 OF 8967