Operational risk at the nation’s banks is elevated, and banks should be mindful of an “increasing trend in external fraud activity targeting consumers and the federal banking system,” according to a report issued Monday by the national bank regulator.
According to the Semiannual Risk Perspective for Fall 2024, issued by the Office of the Comptroller of the Currency (OCC), operational risk is elevated as “banks continue to respond to an evolving and increasingly complex operating environment.”
The report contends that the “evolving cyber threats by sophisticated malicious actors target the financial services industry and their key service providers.” It states that recent significant disruptions across many sectors, including the financial sector, “highlight the importance of sound third-party risk management and operational resilience.”
On fraud vigilance, the agency report stated that the frequency of fraud schemes both traditional and novel, and more sophisticated fraud activities targeting customers and banks, continues to increase.
“Banks should maintain sound fraud risk management practices through prudent controls and appropriate fraud monitoring capabilities to identify, investigate, mitigate, and report fraudulent activity,” the report states. “Banks can also support their customers by providing educational information about trending fraud activities and ways to protect themselves.”
The report also names risk in multifamily commercial real estate (CRE) lending as “elevated,” particularly in the luxury segment.
The report also assesses risk in various other areas, including: CRE office sector lending (stressed); commercial credit (moderate, stabilizing); overall retail credit (stable); Community Reinvestment Act (CRA) related-areas (stable); market (starting to stabilize).
OCC Reports on Key Risks in Federal Banking System
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