Fed To End Use Of Reputational Risk In Examination Programs

The Federal Reserve Board has announced that it will eliminate reputational risk as a component of examination programs in its supervision of banks.

The Fed joins the OCC in eliminating reputational risk as a part of their examinations.

The Fed stated it has commenced the process of reviewing and eliminating references to reputational risk from its supervisory materials, including examination manuals. The Board added that it "will train examiners to help ensure this change is implemented consistently across Board-supervised banks and will work with the other federal bank regulatory agencies to promote consistent practices, as necessary."

The Fed added, "This change does not alter the Board's expectation that banks maintain strong risk management to ensure safety and soundness and compliance with law and regulation nor is it intended to impact whether and how Board-supervised banks use the concept of reputational risk in their own risk management practices."