Regulators Stepping-up ERM Examinations

Yesterday, an article by FinCriAdvisor highlighted how regulators are stepping-up their reviews of enterprise risk management ("ERM") programs at both large and small financial institutions.  As they have been calling for stronger enterprise risk management practices, regulators have also been working on new ERM guidance that banks will need to follow in the future.  Here is a portion of what was reported.

Regulators have begun to focus more heavily on the way banks handle risk assessment, urging in recent testimony and regulatory updates - as well as in examinations - that institutions move toward an "enterprise risk management" model.  "There is an increasing interest with the regulators, no doubt, and a lot of risk management guidance in the works," adds Bernard Mason, regulatory relations liaison with the Risk Management Association (RMA) in Washington, D.C. He cites new commercial real estate credit concentration rules that lean heavily on risk management, pending rules on liquidity risk management that would tie U.S. guidelines with those of COSO and Basel, and new September guidance on correspondent risk management.  "Clearly, regulators are asking banks to identify risk appetite," agrees Mark Zmiewski, head of research at the RMA in Philadelphia. "That reaches a higher level of importance today under governance issues." This includes the role of the board in establishing the bank's risk appetite (the amount of risk it is willing to accept to increase earnings), how well-versed senior management is in carrying out that plan, and how well risk is measured and monitored, he says.

Is your company prepared for the greater ERM scrutiny?  If not, Wheelhouse Advisors can provide cost-effective solutions.  Visit www.WheelhouseAdvisors.com to learn more.