OCC Updates Guidance on Third-Party Risk Management
The OCC recently issued updated guidance to national banks and federal savings associations on assessing and managing risks associated with third-party relationships. The new guidance introduces a “life cycle” approach to third-party risk management, requiring comprehensive oversight throughout each phase of a bank’s business arrangement with third-party service providers, and instructs banks to adopt risk management processes commensurate with the level of risk and complexity of its third-party relationships. The OCC’s new guidance follows other recent regulatory pronouncements on the need to effectively monitor and assess the activities of outside vendors, indicating that third-party risk management practices will become an increasingly important focus of examination and enforcement.