OCC Report Discusses Key Risks for Federal Banking System

On January 18th, the Office of the Comptroller of the Currency (OCC) reported credit, operational, and compliance risks are key concerns for the federal banking system in its Semiannual Risk Perspective for Fall 2017.

Some highlights from the OCC report include:

  • The credit environment continues to be influenced by aggressive competition, tighter spreads, and slowing loan growth. These factors are driving incremental easing in underwriting practices and increasing concentrations in select loan portfolios—leading to heightened risk if the economy weakens or markets tighten quickly.
  • Operational risk continues to challenge banks because of increasing complexity of cybersecurity threats, use of third-party service providers, and increasing concentrations in third-party service providers for some critical operations.
  • Compliance risk remains elevated as banks continue to manage money laundering risks, as well as consumer compliance risks, particularly due to the increasing complexity of consumer compliance regulations.

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