Federal Reserve Board removes reputational risk from bank examination programs

The Federal Reserve Board announced that reputational risk will no longer be a component of its examination programs for Board-supervised banks. The Board has begun reviewing supervisory materials to remove references to reputation and reputational risk and, where appropriate, replace them with more specific discussions of financial risk. Implementation will include updates to supervisory materials such as examination manuals, examiner training to support consistent application across supervised banks, and coordination with other federal bank regulatory agencies to promote consistent practices where necessary. The Board said the change does not alter its expectation that banks maintain strong risk management to ensure safety and soundness and compliance with law and regulation, and it is not intended to affect whether or how banks use reputational risk in their own risk management frameworks.