At a glance
The OCC's new risk governance proposal does more than codify heightened expectations.
The Office of the Comptroller of the Currency (OCC) recently issued a Notice of Proposed Rulemaking to establish formal guidelines incorporating thirteen standards for a bank’s risk governance framework, and six standards for a bank’s board of directors (Guidelines). Public comments are due by March 28, 2014.
The Guidelines are consistent with the heightened expectations for strong risk management frameworks that the OCC has been communicating as part of its Large Bank Program post-financial crisis, and are also generally consistent with practices adopted by the G-SIBs under the Federal Reserve’s watch. However, the formalization of these standards will greatly enhance clarity around the OCC’s expectations and more importantly make these standards “rules,” thus significantly enhancing the OCC’s enforcement power and authority.
The following are the Guidelines’ key takeaways:
This Financial Services Regulatory Brief analyzes the Guidelines’ standards for risk governance and for the board of directors, assesses the current state of the industry against the standards, and suggests what banks should do next.