Despite a myriad of ongoing post-crisis issues creating complexity for organizations, the GCOR VI conference helps to reinforce positive happenings in the industry, said Kenneth Fulton, Analyst to Deputy Comptroller, OCC. Namely, risk appetite frameworks are being put into place in many banks as well as infrastructure projects addressing MIS deficiencies.
Joining Fulton on the regulatory panel were Eric Caban, Supervising Examiner, Federal Reserve Bank of New York and Evangelos Sekeris, AVP, Federal Reserve Board of Richmond. All agreed that over the next few years, the industry will be dealing with a changing landscape as regulators complete Dodd-Frank implementation. The foreclosure crisis will linger for a few more years with another million and a half loans over 90-day delinquency.
Regarding AMA implementation, the industry has learned that data collection and capital estimation and modeling are not enough. An integrated approach to operational risk systems is necessary as operational risk is embedded in every business function. Additional lessons learned that were echoed throughout the two-day conference include taking a closer look when dashboards are green, avoiding complacency by adopting a healthy dose of skepticism, as well as breaking down risk silos to effectively manage risk.
All three regulators recognized that agencies historically haven’t been specific with expectations, but a concerted effort to make improvements means a clearer direction for organizations going forward.