Eleven Major US Banks Identified with Inadequate Operational Risk Management by OCC: Cyber Attacks, Employee Errors, and Natural Disasters among Concerns

Washington D.C., District of Columbia United States of America
11 major US banks identified as having inadequate operational risk management by OCC
Downgrading of banks' CAMELS rating affects deposit insurance premiums, audits and their ability to engage in certain activities
OCC found that approximately one-third of these banks rated three or worse on a five-point scale for overall management
Operational risk includes cyber attacks, employee errors, legal troubles, natural disasters and technology issues
Operational risk is the broadest component of OCC's supervisory framework
Eleven Major US Banks Identified with Inadequate Operational Risk Management by OCC: Cyber Attacks, Employee Errors, and Natural Disasters among Concerns

A number of major banks in the United States have been identified as having an inadequate grasp of operational risk by the Office of the Comptroller of the Currency (OCC), according to confidential assessments. The OCC, which is a key U.S. regulator, found that 11 out of 22 large banks it oversees have insufficient or weak management of operational risk.

Operational risk encompasses a broad range of potential threats to banks beyond loans going bad or market swings causing losses. These risks include cyber attacks, employee errors, legal troubles, natural disasters and technology issues.

Approximately one-third of these banks rated three or worse on a five-point scale for overall management. This indicates concern from U.S. regulators about the level of risk at the country's largest banks.

The OCC's operational risk assessments are part of a larger scoring metric known as CAMELS rating, which stands for six measures of operations: capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk.

The downgrading of banks' CAMELS rating can have far-reaching implications. It affects banks' deposit insurance premiums, audits and their ability to engage in certain activities. Downgraded lenders may be barred from making deals and denied emergency liquidity from the Federal Reserve.

The harsh grades are part of sweeping regulatory scrutiny following record-setting bank failures last year, with regulators vowing to do more to identify and act on problems.

Banks have to show regulators plans for managing operational risks, and they have to hold capital against those threats. However, these risks are harder to measure than credit or market risks.

Operational risk is a catch-all category that functions as the broadest component of the OCC's supervisory framework. It is elevated as the industry responds to an increasingly complex operating environment.


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Confidence

90%

Doubts
  • Are there any specific examples of cyber attacks or employee errors mentioned in the assessment?
  • What are the names of the 11 banks identified as having inadequate operational risk management?

Sources

97%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

Half of large U.S. banks are failing on operational risk, secret report finds

Fortune Media Inc. Hannah Levitt,Katanga Sunday, 21 July 2024 00:00
  • Unique Points
    • A key U.S. regulator, the Office of the Comptroller of the Currency (OCC), has privately found that half of the major banks it oversees have an inadequate grasp of operational risk.
    • Approximately one-third of these banks rate three or worse on a five-point scale for overall management, indicating concern from U.S. regulators about the level of risk at the country’s largest banks.
    • Operational risk encompasses a broad range of potential threats to banks, including cyber attacks, employee errors, legal troubles, natural disasters and technology issues.
  • Accuracy
    No Contradictions at Time Of Publication
  • Deception (100%)
    None Found At Time Of Publication
  • Fallacies (85%)
    The article contains an appeal to authority and a dichotomous depiction. It reports on a confidential assessment by the Office of the Comptroller of the Currency (OCC) without providing details on how these assessments were conducted or what specific banks were evaluated. This creates an us-versus-them mentality, as it presents the OCC's findings as fact without allowing for any counterarguments or alternative viewpoints. Additionally, there is a lack of context provided regarding the operational risk category and its significance in bank evaluations.
    • A key U.S. regulator has privately found half of the major banks it oversees have an inadequate grasp of a broad swath of potential risks from cyber attacks to employee blunders, according to people familiar with the matter.
    • The OCC didn’t comment specifically on the nonpublic findings. In a statement, the regulator said that Acting Comptroller Michael Hsu has “consistently discussed the need for banks to guard against complacency and actively manage their risks in order to build and maintain trust in the federal banking system.”
  • Bias (100%)
    None Found At Time Of Publication
  • Site Conflicts Of Interest (100%)
    None Found At Time Of Publication
  • Author Conflicts Of Interest (100%)
    None Found At Time Of Publication

100%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

OCC: Banks Unprepared for Cyberattacks and Other Risks

PYMNTS.com Unknown PYMNTS Sunday, 21 July 2024 23:51
  • Unique Points
    • The Office of the Comptroller of the Currency (OCC) has determined that 11 out of 22 large banks it oversees have ‘insufficient’ or ‘weak’ management of operational risk.
    • Banks with weak operational risk management may face consequences such as increased deposit insurance premiums, audits, and restrictions on activities.
    • Cybercriminals continue to pose a threat to businesses and organizations, requiring a shift from purely preventive approaches to ones that balance prevention with robust response and recovery.
  • Accuracy
    No Contradictions at Time Of Publication
  • Deception (100%)
    None Found At Time Of Publication
  • Fallacies (100%)
    None Found At Time Of Publication
  • Bias (100%)
    None Found At Time Of Publication
  • Site Conflicts Of Interest (100%)
    None Found At Time Of Publication
  • Author Conflicts Of Interest (100%)
    None Found At Time Of Publication

100%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

Secret bank ratings show US regulator’s concern on handling risk

The Edge Malaysia Sunday, 21 July 2024 22:36
  • Unique Points
    • A key US regulator, the Office of the Comptroller of the Currency (OCC), has privately found that half of the major banks it oversees have an inadequate grasp of a broad range of potential risks.
    • About one-third of the banks rated three or worse on a five-point scale for overall management, indicating concerns over risk levels at the country’s largest banks.
    • Operational risk is one category used by regulators to evaluate overall risk at banks and covers potential threats beyond loans going bad or market swings causing losses.
    • The harsh grades are part of sweeping regulatory scrutiny following record-setting bank failures last year, with regulators vowing to do more to identify and act on problems.
    • Operational risk encompasses a broad range of potential threats to banks, including cyber attacks, employee errors, legal troubles, natural disasters and technology issues.
  • Accuracy
    No Contradictions at Time Of Publication
  • Deception (100%)
    None Found At Time Of Publication
  • Fallacies (100%)
    None Found At Time Of Publication
  • Bias (100%)
    None Found At Time Of Publication
  • Site Conflicts Of Interest (100%)
    None Found At Time Of Publication
  • Author Conflicts Of Interest (0%)
    None Found At Time Of Publication