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5 Key Takeaways from OCC Bulletin 2017-21

Jun 13, 2017 by Branan Cooper

Extra extra! Read all about it! Last week, the Office of the Comptroller of the Currency issued Bulletin 2017-21 – Frequently Asked Questions to Supplement OCC Bulletin 2013-29.

We thought it might be helpful to talk about some of the document highlights. These may affect your vendor risk management program and practices.

Background Information

First, the timing of it is a bit of a surprise – they are answering questions for a document that was issued over 3 ½ years ago and months after issuing the supplemental examination guide (OCC Bulletin 2017-7). Perhaps they did so in recognition of how much has changed in both the products and services market as well as the increased expectations of regulators in the course of exams.

The bulletin does emphatically restate that the board is ultimately responsible for third party risk management with about a dozen difference references to board responsibilities and expectations. This comes as no surprise, but it’s always a good opportunity to remind ourselves of the importance of board involvement.

5 Key Vendor Risk Management Takeaways OCC Bulletin 2017-21 Covers

OCC Bulletin 2017-21 clarifies third party risk guidance, answering several vendor management questions that have transpired over the past few years. Here’s what it boils down to:

  • You need to evaluate all third parties, even those of low risk
  • Banks may well collaborate in gathering and analyzing due diligence but be reminded that the individual financial institution is ultimately responsible for the analysis of risk and taking appropriate follow-up action
  • The introduction of guidance around various other questions – such as the role of marketplace lends and that you need to evaluate subservice providers/fourth parties
  • The reality of the difficulties associated with doing appropriate due diligence and risk assessment of the emerging technology products and services – many of which simply didn’t exist in 2013
  • Reminder that you may obtain records of examination of technology service providers from your supervisory office. But, some items may be hard to get – this bulletin lays out what items may or may not be available based on timing, the type of service and its usage

Why Read the Bulletin?

Reading every bulletin is important so that you can determine its impact to your institution. Perhaps it’s as easy as an informed discussion among your various risk and legal team members. In any case:

  • Make sure you document the discussion
  • Document the extent you find something in the bulletin that requires an adjustment of practices or reference materials
  • Pass along the news and relevant notes to your board, senior management and risk management teams

I’m eager to see if there will be any additional legal analysis on this FAQ bulletin forthcoming or if the context of it will become more evident in the requests and results of upcoming exams. For now, it was simply an opportunity to revisit, restate and clarify some vendor risk management points raised in OCC 2013-29.

For a reminder on what OCC Bulletin 2017-7 was all about, download our OCC Bulletin 2017-7 Guide.

Guide on OCC Bulletin 2017-7

Branan Cooper

Written by Branan Cooper

Branan Cooper is the Chief Risk Officer at Venminder. Branan has nearly 30 years of experience in the financial services industry with a focus on the management of operational and regulatory processes and controls—most notably in the area of third party risk and operational compliance. Branan leads the Venminder delivery team as the third party risk management subject matter expert in residence. Branan also serves as an industry thought leader. He's a member of InfraGard and the Professional Risk Management Industry Association (PRMIA). And, he was selected in 2018 as an advisor to the Center for Financial Professionals (CEFPro) and board member for the Global Sourcing Resource Network (GSRN).

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