OCC Wants Banks to Have Independent Risk Management Functions and Board Oversight
The Office of the Comptroller of the Currency proposed new governance and risk management guidelines for large national banks, although it can choose to impose the guidelines on smaller banks that present a “heightened risk.” The guidelines would require covered banks to implement an independent risk management and internal audit function and draft a comprehensive risk management statement with both quantitative and qualitative components. The guidelines would also require boards of directors to oversee all risk-taking activities, impose accountability on management, and challenge management recommendations. The guideline would also require two independent directors.
OUR TAKE: How is this relevant to the investment management industry? Much of the compliance regulation applicable to investment managers was derived from banking regulation. Consider these proposals foreshadowing for future SEC requirements.