The Office of the Comptroller of the Currency (OCC) released their “Fiscal Year 2024 Bank Supervision Operating Plan” on September 28, 2023.
The plan defines their priorities and objectives for the year ahead and is a guide to the OCC’s planning and resource allocations. The plan is utilized by managers and staff to develop and implement risk-focused supervisory strategies as well as individual operating unit plans. The following areas were determined as a focus for the upcoming year based on their risks:
- Asset and liability management
- Credit
- Allowance for credit losses (ACL)
- Cybersecurity
- Operations
- Distributed ledger technology (DLT) related activities
- Change management
- Payments
- Bank Secrecy Act (BSA)/Anit-money laundering (AML)/Countering the financing of terrorism (CFT) and Office of Foreign Assets Control (OFAC)
- Consumer Compliance
- Community Reinvestment Act (CRA)
- Fair Lending
- Climate-related financial risks
The OCC is taking various ongoing risks into account, including high inflation, rising interest rates, the possibility of a continuing recession, and geopolitical events that may have adverse financial, operational and compliance implications on financial institutions. Furthermore, in light of the bank failures in 2023, there has been a spotlight on liquidity, a major aspect in asset and liability management.
To mitigate these risks, management should review these potential risks and how they may apply to banking operations and services, particularly in the areas listed above. This process may include a deeper dive into due diligence and risk assessments of the financial institution to ensure that any emerging risks are recognized, can be mitigated and control functions are in place. A few items to consider during this review are policies, procedures, limits, liquidity stress tests, scenario analysis capabilities, data and metrics, and governance/oversight.
For additional details regarding the OCC’s areas of focus, please review the OCC’s Fiscal Year 2024 Bank Supervision Operating Plan. Additionally, the OCC provides periodic updates in their “Semiannual Risk Perspective” regarding supervisory priorities, emerging risks, and horizontal risk assessments.
Analyzing and preparing for potential risks is crucial in the ever-changing financial services industry. Being able to mitigate potential risks that arise is key to protecting your institution.
How Can Schneider Downs Help?
The Schneider Downs Risk Advisory Services team can aid with reviewing areas of focus that may be of high risk as well as assist with the mitigation of risks in regards to compliance, operational, or financial challenges.
About Schneider Downs Risk Advisory
Our team of experienced risk advisory professionals focus on collaborating with your organization to identify and effectively mitigate risks. Our goal is to understand not only the risks related to potential loss to the organization, but to drive solutions that add value to your organization and advise on opportunities to ensure minimal disruption to your business.
Explore our full Risk Advisory Service Offerings or contact the team at [email protected]
