Let's Talk About Risk

In my days of playing youth sports, it was well known that if you hit the ball to me, my eyesight was so bad, I would likely drop the ball and you were off and running. But conversely, it was also known when I came up to bat, you better move the fielders back as I was a long ball hitter. It was all about adjusting to risk.

Bank regulators expect you to adjust for and monitor your compliance risk. That is why an evaluation of the quality of your bank's Compliance Management System (CMS) has become such an important part of the regulatory compliance exam. A bank’s CMS has multiple components including:

  • Training
  • Documented risk assessment
  • Internal self-assessment program
  • Formal trend reporting, monitoring and analysis
  • Vendor management
  • Corrective action
  • Board reporting
The regulatory agencies have multiple checklists, tools, and discussions dealing with these topics, indicating their importance.

Compliance risk management within a compliance management system is all about understanding, assessing, communicating, trending, and correcting those compliance risks specific to your bank which present the greatest compliance problem potential. A big advantage of a well-coached, credible, and played compliance management system can be that it serves to reduce the scope and extent of your next regulatory compliance exam.

So, don’t drop the ball!!! Ensure your compliance management system is efficient and effective, credible, and demonstrates such to the examiners at your next exam. A fine tuned compliance management system will likely reduce the scope and extent of your next regulatory exam.

Deal with your compliance management system program and hit the long ball on your next regulatory exam.