WASHINGTON–The FDIC has released a report identifying what it says are the top challenges it faces. It has also joined other agencies in issuing a statement around crypto risk.
The report, issued by the FDIC’s Office of Inspector General (OIG) said the top challenges include “risks to FDIC mission-critical activities and to FDIC internal programs and processes that support mission execution.”
Other top challenges identified in the report include:
- Improving the FDIC’s collection, analysis, and use of data
- Fostering financial inclusion for underserved communities
- Implementing effective governance at the FDIC
- Fortifying IT security at the agency
- Managing changes in the workforce
- Strengthening FDIC contracting and supply chain management
‘Readiness Challenges’
When it comes to preparing for banking crises, FDIC’s OIG stated agency faces “readiness challenges” when it comes to developing plans to respond to an unfolding crisis. That includes taking into account climate-related risks, the report said.
Meanwhile, when it comes to mitigating cybersecurity risks at banks and third parties, an issue the NCUA board frequently identifies as their top concern, the report suggests the FDIC faces challenges to ensure examiners “have the skillsets and knowledge to conduct information technology examinations that adequately identify and mitigate cybersecurity risks at banks and their third-party service providers (TSP).”
Additional Recommendations
The OIG report also recommends:
- The FDIC should also ensure it has effective processes for the intake of banks’ cybersecurity incident reports, and that those reports are used to “mitigate identified risks, identify trends and patterns of nefarious activity, and adjust supervisory processes.” The report adds that mitigating such risk is critical “as a cyber incident at one bank or TSP has the potential to cause contagion within the financial sector.”
- With digital assets now held by approximately 52 million Americans and with 136 banks providing ongoing or planned digital asset activities, “the FDIC should work with other regulators to provided clarity regarding the regulation of digital assets. The FDIC should also have examiners with appropriate skillsets and examination processes to assess the safety and soundness of banks’ digital asset activities and identify consumer risks. Further, the FDIC should ensure that its examinations, policies, and procedures address consumer risks regarding digital assets, including the relationship of deposit insurance and digital assets.”
Statement on Crypto Risk
Separately, the FDIC joined with the Federal Reserve and the OCC in issuing a joint statement highlighting liquidity risks to banking organizations associated with certain sources of funding from crypto-asset-related entities and some effective practices to manage those risks.
“Recent events in the crypto-asset sector have underscored the potential heightened liquidity risks presented by certain sources of funding from crypto-asset-related entities,” the agencies said. “The joint statement highlights key liquidity risks and some effective practices to monitor and appropriately manage those risks. The statement reminds banking organizations to apply existing risk management principles; it does not create new risk management principles.”
Banking organizations are neither prohibited nor discouraged from providing banking services to customers of any specific class or type, as permitted by law or regulation, the agencies added.
The full statement can be found here.
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