U.S. banking regulators have published final guidelines that aim to strengthen the governance and risk management practices of large financial institutions.
The new guidelines, which were issued Tuesday by the Office of the Comptroller of the Currency (OCC), require banks to establish and follow a written risk governance framework to manage and control risk-taking activities. They also set minimum standards for boards of directors to oversee the risk governance framework.
“The 2008 financial crisis demonstrated that much stronger supervisory standards would be necessary to manage the risks associated with large, complex financial institutions,” said Comptroller of the Currency, Thomas Curry. “As a result, the OCC raised its standards for risk management, corporate governance, and control to help ensure these institutions effectively anticipate, evaluate, and mitigate the risks they face. The guidelines finalized today are an important step in making our federal system of banks and thrifts stronger and more resilient.”
Institutions with US$750 billion or more in assets are expected to comply with the new guidelines immediately. Banks with assets of between US$100 billion and US$750 billion have six months to comply; and banks that have assets of between $50 billion and $100 billion must comply within 18 months.