Treliant Takeaway…OCC’s 2024 Fiscal Year Bank Supervision Operating Plan

The OCC Releases its 2024 Fiscal Year Bank Supervision Operating Plan:  Key Themes and New/Emerging Areas of Focus

• Source: occ.gov

Highlights:

The Office of the Comptroller of the Currency (OCC) released its annual bank supervision operating plan on September 28, 2023, for the fiscal year period of Oct. 1, 2023 – Sept. 30, 2024. The Operating Plan (Plan) establishes the agency’s annual supervision priorities and objectives and provides insight to the areas the OCC will be focused on in their examinations of the banks and third-party service providers subject to OCC supervision. Institutions subject to OCC supervision should become very familiar with this Plan and use it as a guide to conduct internal readiness assessments and inform exam preparations.

The OCC makes special note that while they are providing a list of priority areas of focus, they will also be adjusting their agenda and priorities, as needed, in response to emerging risks and events. They also state that in addition to these risk-based priorities, they will be evaluating adverse financial, operational, and compliance impacts to an institution resulting from the current and recent economic conditions and geopolitical events.

While the priority topics listed in the Plan are familiar, upon close read, there are a number of key themes that emerge and warrant close evaluation and consideration.

• Risk practices should be aligned to the risk profile of the institution and should be modified in accordance with changes related to economic conditions, geopolitical events, pace of growth, and innovation.
• Well tested operational resilience and contingency planning is fundamental to the ability of the institution to adapt quickly to changes (anticipated and not) and withstand unprecedented impacts.
• Talent is a critical asset and the recruitment, development, and succession planning of key talent is an important risk management practice.
• Effective governance, credible challenge, and the strength of independent risk management must be demonstrated.
• Third-party risk management will not be examined in a silo, but across all areas of the bank.
• Areas of innovation (distributed ledger technology, large-language models/AI, banking-as-a -service, payments, etc.) will be considered areas of heightened risk and the risk management programs to support them should be commensurate.
• Reputational risk can spread and compound at an alarming rate and with potentially disastrous effects. The OCC mentions reputational risk several times in this Plan.
• High risk activities and significant initiatives/changes will receive heightened attention by the OCC. These include, among many others, certain third-party relationships, high growth rates, elevated risks driven by market conditions (commercial real estate), new products/services/delivery channels, significant changes to leadership, changes to business strategy and profitability model, and major technology changes. A strong change management program that ensures robust risk assessment, preventative controls, consideration of risk appetite, and governance is expected.

How Treliant Can Help:

At Treliant, our teams are composed of former industry practitioners and regulators who help financial institutions drive business change and address the most pressing compliance, regulatory, and operational challenges by blending a regulator’s perspective with global, practitioner-based expertise.

As trusted partners to our clients, we deliver quality in assessing, designing, implementing, remediating, and maintaining all facets of a robust, effective, and adaptive risk and compliance program, that is commensurate to a firm’s risk profile, establishing strong management and board governance frameworks, preparing for examinations, and optimizing your operational processes. We keep a close pulse on the rapidly changing and innovating industry and regulatory environment to best serve our clients as they adapt to the evolving landscape.

Our advisory, staffing, and outsourced operations offer customized solutions that are tailored to meet the specific needs of our clients and the demands of the financial services industry.