Risk & Resilience

In the wake of persistent market uncertainties and last year’s banking sector turmoil, the Basel Committee on Banking Supervision has once again taken a firm stance on global banking resilience. Meeting in Basel on November 19–20, 2024, the committee zeroed in on advancing regulatory consistency, improving risk management practices, and equipping supervisors with sharper tools for navigating the complexities of today’s financial ecosystem.

Between May and October 2024, the Federal Reserve has been busy shaping the regulatory landscape for U.S. financial institutions, reinforcing its commitment to ensuring the safety, stability, and soundness of the banking system while protecting consumers in a rapidly changing environment. In its latest Supervision and Regulation Report, the Fed highlights several initiatives that reflect its ongoing efforts to keep pace with emerging risks and challenges in the financial sector.

The Australian Prudential Regulation Authority (APRA) has released findings from its second climate risk self-assessment survey, offering insights into how financial institutions are addressing climate-related risks. The survey, aimed at all APRA-regulated banks, insurers, and superannuation trustees, drew responses from over half of the invited entities. It builds upon a smaller 2022 assessment that initially focused on large entities, marking a broadening effort to gauge sector-wide climate resilience.

As international tensions escalate, the financial sector in the Netherlands faces mounting risks that demand a swift, strategic response. In its supervisory strategy for 2025-2028, De Nederlandsche Bank (DNB) warns that Dutch financial institutions—banks, insurers, and pension funds—must bolster their resilience against an increasingly unpredictable global landscape.

Acting Comptroller of the Currency Michael J. Hsu warned financial institutions against falling into compliance tunnel vision, citing historical examples where regulatory focus on specific risks inadvertently created new vulnerabilities in the financial system.

On October 3, 2024, American Water, the largest regulated water and wastewater utility in the U.S., fell victim to a cybersecurity breach that has since drawn attention to the broader risks facing critical infrastructure sectors. Serving over 14 million individuals across 14 states, American Water’s systems were infiltrated, forcing the company to disconnect key services and pause customer billing as part of their containment strategy.

In response to the devastation caused by Hurricane Milton, the Office of the Comptroller of the Currency (OCC), along with the Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board, Florida Office of Financial Regulation, and the National Credit Union Administration (NCUA), has issued comprehensive guidance aimed at supporting financial institutions. While this is a collaborative interagency effort, the OCC's involvement is particularly critical for national banks and federal savings associations. This article delves into the OCC’s guidance and examines its implications for compliance and risk management in the aftermath of the hurricane.