OCC Releases Updated Risk Management Guidance

The Office of the Comptroller of the Currency recently released updated guidance for national banks and federal savings associations for assessing and managing the risks associated with third-party relationships.

While this guidance does not directly apply to credit unions, credit unions may find the guidance useful as well.

Highlights of the guidance include:

  • A bank should adopt risk-management processes commensurate with the level of risk and complexity of its third-party relationships;
  • A bank should ensure comprehensive risk management and oversight of third-party relationships involving critical activities; and
  • An effective risk-management process throughout the lifecycle of the relationship includes:
    • Plans that outline the bank’s strategy, identify the inherent risks of the activity, and detail how the bank selects, assesses and oversees the third party;
    • Proper due diligence in selecting a third party;
    • Written contracts that outline the rights and responsibilities of all parties;
    • Ongoing monitoring of the third party’s activities and performance;
    • Contingency plans for terminating the relationship in an effective manner;
    • Clear roles and responsibilities for overseeing and managing the relationship and risk-management process;
    • Documentation and reporting that facilitates oversight, accountability, monitoring and risk management; and
    • Independent reviews that allow bank management to determine that the bank’s process aligns with its strategy and effectively manages risks.


Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance News.