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WASHINGTON—Acting Comptroller of the Currency Michael J. Hsu today issued the following statement on the publication of the Office of the Comptroller of the Currency’s (OCC) Semiannual Risk Perspective Spring 2023 report.

The Semiannual Risk Perspective (SARP) for Spring 2023 highlights key risks facing the federal banking system – risks that we expect bankers to be attentive to and prudently manage, and that reflect our priorities as supervisors of national banks and federal thrifts.

Since March, the OCC has been closely monitoring the conditions of the institutions we supervise. The federal banking system is sound, and deposits are safe. Notably, national banks and federal savings associations (banks) have strengthened their liquidity to cover potential deposit withdrawals.

Looking ahead, the OCC expects banks to “be on the balls of their feet” with regards to risk management, just as our examiners are. This means banks should be:

• guarding against a false sense of comfort from the recent relative stability in bank markets and from the benign credit performance data over the course of the pandemic,
• re-evaluating exposures, especially asset and liability concentrations, across a range of scenarios,
• taking actions to preserve capital and maintain strong liquidity consistent with each bank’s risk profile,
• maintaining discipline and strong risk management across all risk areas, not just in response to headlines, and
• preparing to communicate clearly, credibly, and promptly about their condition and risk profile should questions arise from customers, investors, depositors, and other stakeholders.

Most of the banks we supervise are doing these things. Maintaining such vigilance can be challenging, though. That is why it is critical for us all to continue to guard against complacency.

This issue of the SARP highlights liquidity, operational, credit, and compliance risks. Liquidity positions have been strengthened in response to the turmoil in the first quarter of this year, but risks from elevated interest rates continue. Credit risk in aggregate remains moderate, but signs of stress are increasing, for instance in consumer credit and certain segments of commercial real estate. Operational risk is elevated, as cyber threats persist, and the digitalization of banking products and services expands. In addition, banks need to be vigilant about addressing accumulating “technology debt” from legacy systems and deferred IT maintenance. Compliance risk is also highlighted, given the dynamic environment in which compliance management systems are challenged to keep pace with the change.

I want to acknowledge the OCC staff members who put in so much work to deliver the SARP report twice a year. Their efforts make a significant contribution to the banking industry and regulatory community by providing focus and clarity around the risks facing national banks and federal thrifts, their customers and the communities that rely upon them.

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