On December 3, the Office of the Comptroller of the Currency (OCC) announced in Bulletin 2015 – 48 that it has updated its risk assessment system (RAS) guidance. These updates are reflected in the “Bank Supervision Process,” “Community Bank Supervision,” “Federal Branches and Agencies Supervision,” and “Large Bank Supervision” booklets of the Comptroller’s Handbook and in internal guidance for examiners.
The OCC stated that its updated RAS guidance is a response to the recommendations in “An International Review of OCC’s Supervision of Large and Midsize Institutions” (an international peer review report) and supports the agency’s mission of ensuring a safe and sound federal banking system. The principles contained in the RAS guidance apply to examinations of all national banks, federal savings associations, and federal branches and agencies.
The updated RAS guidance:
- clarifies the relationship between the RAS and capital adequacy, assets, management capability, earnings, liquidity and sensitively (CAMELS) rating, including the forward-looking elements of each;
- revises the definition of banking risk to be the same for all risk categories, and broadens the concept of risk to include its impact on a bank’s current or projected financial condition and resilience;
- expands the “quality of risk management” assessment to include a new category––“insufficient”––to better stratify and communicate concerns; and
- expands strategic and reputation risk assessments to include both quantity of risk and quality of risk management.
The “Bank Supervision Process” handbook is available here.
The “Community Bank Supervision” handbook is available here.