The OCC released the “OCC Semiannual Risk Perspective for Fall 2024,” which analyzes key risks facing the federal banking system as of mid-2024. Overall, “[t]he OCC reported that the strength of the federal banking system remains sound.”
Key themes in the report include credit, operational, compliance, and market risks. For example, commercial credit risk is noted to be moderate, with specific stress in the commercial real estate office sector, while retail credit risk remains stable despite rising delinquencies in credit cards and auto loans. Operational risk is elevated due to evolving cyber threats and the complexity of the operating environment, emphasizing the need for sound third-party risk management. Compliance risk is dynamic, with banks needing to adapt to evolving customer needs and regulatory requirements, particularly in areas such as Bank Secrecy Act and Anti-Money Laundering transaction monitoring. Market risk is influenced by varying net interest margins across banks, with funding costs rising but at a slower pace compared with 2023. The report also discusses climate-related financial risks, highlighting banks’ efforts to manage these risks as part of their broader risk management frameworks.
