Fed to prioritize 'core and material' risks in exams, start MRA review and keep cybersecurity front of mind
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Summary
The Fed’s Vice Chair for Supervision said the agency published supervisory operating principles to focus examiners on core material risks, is conducting a comprehensive review of outstanding safety-and-soundness MRAs with a target to complete it by June, and emphasized cybersecurity remains a top priority.
Unidentified Speaker, Vice Chair for Supervision at the Federal Reserve System, said the Fed published supervisory operating principles directing examiners to prioritize core and material financial risks and to move away from siloed compliance checks.
"We will continue to conduct all of our examination programs, but when we are identifying and prioritizing risks, we will focus on those that can lead to a deterioration in financial condition or a bank's failure, rather than paying excessive attention to processes, procedures, and documentation," the speaker said, characterizing a shift toward unified, forward-looking risk assessments.
The speaker said the Fed has begun a comprehensive review of all outstanding safety-and-soundness Matters Requiring Attention (MRAs) to identify what truly matters for institutional safety and soundness; where MRAs do not meet standards they will be downgraded to nonbinding supervisory observations. The speaker said they expect to complete this review by June.
The remarks stressed that this shift does not mean nonfinancial risks will be neglected. "Cybersecurity, for example, remains a top priority," the speaker said, and the Fed will continue to issue findings and examine for nonfinancial risks where appropriate.
The speaker framed these steps as intended to produce more meaningful supervision that better protects safety and soundness; no formal enforcement actions or vote outcomes were announced in the talk.