On May 17, 2022, Acting Comptroller of the Currency Michael J. Hsu discussed the importance of risk management in remarks at Bloomberg Risk & Regulation Week 2022. According Hsu, banks need to assess exposures and adjust risk profiles ahead of possible uncertainty and volatility in interest rates and loan performance.
In his remarks, Hsu said that though the financial market conditions have been relatively benign since the 2008 financial crisis, targeted and sustained adjustments early on can limit the need for large over-reactions in the future. Hsu highlighted a few areas of consideration such as counterparty concentration, particularly risk aggregation, and sector concentrations. He also highlighted some observations by the OCC on underwriting trends and developments, in commercial and retail credit.
Hsu reminded banks that they can avoid risks by interrogating their exposures, reviewing limits, reducing concentrations, and staying disciplined.
The OCC’s news release can be found here.
A copy of Hsu’s full remarks can be found here.