The OCC issued its first risk appetite statement April 12 aspart of efforts to provide clearer markers around the agency's risk management processes.
During a media briefing addressing the statement, OCC Chief RiskOfficer Linda Cunningham explained that the document is "aspirational"with respect to where the agency wants to be in terms of risk. She said that theOCC plans to keep the document "fresh" by re-evaluating it on at leastan annual basis.
Cunningham became the agency's first chief risk officer in August 2015 in the newly created Officeof Enterprise Risk Management.
During the briefing Tuesday, Comptroller Thomas Curry acknowledgedthat the agency's March 31 white paper addressingfintech innovation falls within the framework of the new risk appetite document.While Curry said that the agency's overall risk appetite remains conservative, Cunninghampointed out that accepting more risk in areas related to innovation gives the agencymore "nimbleness."
The framework laid out both the levels and the varieties of riskthat the agency accepts. In the document, the OCC characterized its appetite forsupervision risk, strategic risk, reputation risk, technology risk, operationalrisk and financial risk as low.
On the other hand, the OCC said its appetite is moderate forlegal risk and for external risk — which includes political and regulatory issuesat home and abroad. The agency also has a moderate appetite for human capital risk— defined as the potential that resource use and employment practices do not alignwith the agency's mission and strategic objectives, through things like talent managementand compliance with employment laws and regulations.
"Where we have discretion, the agency is willing to assumemore risk to remain nimble in meeting the challenges of an evolving banking landscape,"the document stated. "The best risk management practices will not prevent challengesbut will enable the agency to operate proactively."