Shearman & Sterling LLP | FinReg | <span ><font >Federal Reserve Board Proposes Guidance Clarifying Risk Management Supervisory Expectations for Large Financial Institutions</font ></span >
Financial Regulatory Developments Focus
This links to the home page
Blog
FILTERS
  • Federal Reserve Board Proposes Guidance Clarifying Risk Management Supervisory Expectations for Large Financial Institutions
    01/04/2018
    The US Board of Governors of the Federal Reserve System issued proposed guidance for comment that would clarify supervisory expectations related to risk management for large financial institutions. This proposed guidance would complement the Federal Reserve Board’s proposed rating system for large financial institutions and proposed guidance regarding supervisory expectations for bank boards of directors that were released in August of 2017. The proposed guidance provides core principles applicable to senior management, management of business lines, and independent risk management and controls. Under the proposed guidance, senior management is tasked with the management of the day-to-day operations of the institution, ensuring its safety and soundness and overseeing compliance with laws, regulations and internal policies and procedures.

    The core principles applicable to business line management are divided into the categories of (i) implementation and execution or strategy and risk tolerance, (ii) risk identification and risk management, (iii) resources and infrastructure of business lines, (iv) business controls and (v) accountability. The core principles applicable to independent risk management and controls are divided into the categories of (i) governance, independence and stature (including of the Chief Risk Officer and Chief Audit Executive), (ii) independent risk management, (iii) internal controls and (iv) internal audit. The proposed guidance would apply to domestic bank holding companies with total consolidated assets of $50 billion or more, savings and loan holding companies with total consolidated assets of $50 billion or more, the combined U.S. operations of foreign banking organizations with combined U.S. assets of $50 billion or more, any state member bank subsidiaries of the foregoing and systemically important nonbank financial companies designated by the Financial Stability Oversight Council for supervision by the Federal Reserve Board.

    Comments to the proposed guidance are due March 15, 2018.

    View proposed guidance.