This post was originally published on OCC.gov
Tailoring Third-Party Risk Management to the Risks That Matter Most
Bolstering Core Service Providers’ Transparency in Community Bank Engagements
WASHINGTON–The Office of the Comptroller of the Currency today continued to empower community banks and reduce their burden with a proposal to tailor third-party risk management to actual risk, and by providing greater clarity regarding supervision and enforcement of core service providers.
The OCC’s proposed guidance would help banks focus their resources on third-party relationships based on the magnitude and likelihood of potential harm actually posed by each relationship, while tailoring risk management to each bank’s size, complexity, and risk profile. It would move away from overly broad, process-driven approaches, make clear that there is no one-size-fits-all approach to third-party risk management, and encourage responsible innovation.
The OCC also provided community banks greater clarity regarding the agency’s risk-based supervision and enforcement of core service providers to help address situations where these banks face challenges with due diligence, ongoing monitoring, and contract terms.
Together, these actions give community banks greater flexibility to manage risk and provide innovative products and services, enhancing their ability to serve customers, support local businesses, and strengthen their communities.
“President Trump and Secretary Scott Bessent are leading the historic community bank comeback because they understand that strong community banks mean stronger communities, greater opportunity for American families and businesses, and a stronger American economy,” said Comptroller of the Currency Jonathan V. Gould. “The OCC is proud to turn their vision into action. Today, we are cutting unnecessary regulatory friction, tailoring supervision to actual risk, and strengthening community banks’ ability to manage critical third-party relationships. We are giving these vital institutions more freedom to do what they do best – serve their customers, support local businesses, strengthen their communities, and drive economic growth across America.”
The OCC remains committed to addressing the challenges for community banks and has taken a series of actions to rightsize regulatory burden and tailor supervisory activities so these institutions may grow and continue to meet the needs of the customers and small businesses they serve. These actions include: