The OCC’s “Semiannual Risk Perspective for Fall 2020,” released Monday, lays out new and emerging pandemic-related risks for banks caused by credit defaults and historically low interest rates; cyber-security threats posed by work-from-home environments; and compliance risks being elevated by remote work as well as “the requirement to quickly operationalize federal, state, and proprietary programs designed to support businesses and consumers,” the agency said in a press release accompanying the report. The report covers risks facing national banks and federal savings associations based on data as of June 30.
In response to coronavirus-induced stresses, banks’ first reactions have been to trim operating costs, the OCC said. But these cuts should be implemented in a way as to not weaken important compliance functions, the agency warned.
“Key control functions and processes, such as risk management, audit, compliance, and staff development, should be maintained to ensure risk management oversight during times of economic stress,” the report said. “Cost-cutting considerations need to be carefully balanced with a proper control and testing environment as well as…
