An emphasis on risk-focused supervision

Earlier this week, the Federal Financial Institutions Examination Council (FFIEC) released an update on the continuing efforts to modernize the examination process by financial regulators.  The project stems from a review of regulations under the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) with a goal to reducing unnecessary regulatory burden on community financial intuitions.

Examination plans and procedures will be tailored and focused so that more resources will go to those institutions or areas that present heightened risk as opposed to where those that do not.  As part of the review process, it was determined that similar programs and processes for risk tailoring examinations have been developed by the state and federal regulators with common risk tailoring principles and practices.  If necessary, FFIEC members (including the National Credit Union Administration (NCUA)) have committed to issue additional guidance to their examination staffs on the risk-focused examination principles.  The guidance has or will cover the following practices in developing an examination plan and procedures:

  • Consider the institution’s unique risk profile, complexity and business model.


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