On 5/18/21, the OCC released the Spring 2021 edition of its publication Semiannual Risk Perspective. This edition reports key issues facing the banking industry and the effects of the COVID-19 pandemic on the industry. The report highlights credit, strategic, operational, and compliance risks. In their release, the OCC provides the following highlights from its report:
Credit risk is elevated and transitioning as the economic downturn continues to affect some borrowers’ ability to service debts. Assistance programs and federal, state, and local stimulus programs have suppressed past-due levels.
Strategic risks associated with banks’ management of Net Interest Margin (NIM) compression and efforts to improve earnings is elevated. Banks attempting to improve earnings may implement measures including cost cutting, increasing credit risk (both credit and investments) or extending duration.
Operational risk is elevated due to a complex operating environment and increasing cybersecurity threats.
Compliance risk is elevated as banks’ expedited efforts to implement assistance programs continue to challenge established change management, product, and service risk management practices.
The OCC release can be found here.
The full publication can be found here.