Fed Updates Exam Guidance for Banks; Drops "Reputational Risk" from Guidelines

The Federal Reserve Board revised its supervisory guidance to remove "reputational risk" as a factor in the examination and rating of banks and bank holding companies.

In a Supervision and Regulation letter, the Division of Banking Supervision and Regulation revised its Federal Reserve Guidelines for Rating Risk Management at State Member Banks and Bank Holding Companies. The updated version dropped "reputational risk" as one of the factors

In an accompanying press release, the Fed stated that it "started the process of reviewing and removing references to reputation and reputational risk from its supervisory materials, including examination manuals, and, where appropriate, replacing those references with more specific discussions of financial risk." The Board noted that this change is not "intended to impact whether and how Board-supervised banks use the concept of reputational risk in their own risk management."