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FDIC Reviews Risks Facing Banking Industry

In its 2023 Risk Review, the FDIC reported that despite weak economic conditions, increasing interest rates and inflation and financial market stress, the banking industry demonstrated resilience.

The FDIC highlighted the following risks:

  • Credit Risk. The FDIC maintained that asset quality continues to be "generally favorable," but noted that weaker economic conditions and higher interest rates create risk.
  • Operational Risk. The FDIC underscored operational risk as "one of the most critical risks to banks" due to geopolitical events increasing the chances for cybersecurity attacks on banks.
  • Crypto Asset Risk. The FDIC said that "novel and complex" risks emerge that are "difficult to fully assess."
  • Climate-related Financial Risk. The FDIC said that damages caused by severe weather and climate events were "among the most costly" in 2022. The agency said that it "recognizes that risk management practices in this area are evolving and will continue to encourage banks to consider climate-related financial risk in a manner that allows them to prudently meet the financial services needs of their communities."

Primary Sources

  1. FDIC Report: Risk Review 2023
  2. FDIC Press Release: FDIC Publishes 2023 Risk Review

Tags

Regulated Activities
Risk Management
Regulated Entities
Banking Entities
Regulated Products
ESG
Body of Law
Banking Law
Jurisdiction
US - Federal
Organization
US Banking Regulators
Sub-Author
FDIC