The Topics in the News column offers a quick look and access to trending topics appearing in online industry publications. This issue taps BankDirector.com and S&P Global’s Market Intelligence on cyber, ESG and cannabis, as well as a featured webinar on digitally managing credit risk.
Topic 1: The No. 1 Risk for Banks (Cyber)From The Slant by BANK Director
With all of the focus on COVID-19’s impact on the economy, you’d think credit was the biggest concern for regulators right now. However, at a [recent] Bank Director conference, Thomas Herslebs, assistant deputy comptroller with the Office of the Comptroller of the Currency, said that cybersecurity is probably the No. 1 risk for banks today.
As a regulator, he admitted it was tough to say credit isn’t the top concern.
“Your bank is being attacked constantly,” Herslebs said. “I’ve come to believe, whatever amount of money you’re spending on cybersecurity, it’s probably not enough right now because things are changing that fast.”
And in Bank Director’s 2021 Risk Survey, 92% of respondents polled in January thought cybersecurity risk was increasing somewhat or significantly — more than any other risk. Perhaps it’s the moment we’re in. Credit quality remains high. Businesses and individuals are still hurting, but the problems are not widespread.
Incidents of ransomware, on the other hand, seem to have escalated. In ransomware attacks, criminal groups typically penetrate networks and lock an organization’s data, which can only be unlocked with a “key” once a ransom is paid. Three Florida banks recently experienced ransomware attacks by the group known as Ragnar Locker, Herslebs said.
He suggested four questions board members should ask management about the bank’s security:
1. Are you implementing the best backups possible?
2. Are you testing your recovery capabilities?
3. Are you assessing your third-party vendors’ resiliency plans?
4. Are you assessing your options in case a third-party vendor goes offline?
Herslebs also recommended that boards understand the bank’s process for ensuring that IT staff fix system vulnerabilities as soon as they become known, and updates are released. Don’t accept excuses as to why patching can’t be done as soon as possible, he added.
Cybersecurity has always been a board-level issue. There’s a simple reason for that— financial institutions remain the number one target for hackers. After all, that’s where the money is.
Topic 2: ESG Disclosure on the Horizon for Financial InstitutionsFrom BankDirector.com Over the last several years, investors, regulators and other stakeholders have sought an increase of environmental, social and governance (ESG) disclosures by public companies.
The U.S. Securities and Exchange Commission (SEC) has taken a cautious approach to developing uniform ESG disclosure requirements but made a series of public statements and took preliminary steps this year indicating that it may soon enhance its climate-related disclosure requirements for all public companies, including financial institutions. To that end, the SEC’s spring 2021 agenda included four ESG-related rulemakings in the proposed rule stage. In late September, the SEC’s Division of Corporation Finance continued signaling the increased importance of ESG initiatives in its mission by publishing a sample comment letter similar to what it may provide to issuers when reviewing their filings.
Recent speeches by Chair Gary Gensler and Commissioners Allison Herren Lee and Elad Roisman highlight some of the key elements of disclosure likely under consideration by the staff, as well as their personal priorities in this area.
Learn more about the significance for financial institutes here — ESG Disclosure on the Horizon for Financial Institutions | Bank Director.
Topic 3: What to Know About Cannabis Banking in 2022From BankDirector.com
The cannabis industry is growing exponentially, and nationwide sales are estimated to exceed $30 billion in 2022.
This growth comes with extraordinary opportunities for banks to offer services to the still largely unbanked and underbanked cannabis industry. Board members and C-suite executives cannot afford to ignore the potential impact of cannabis on their bank in 2022, whether they are banking it or not. Here are some trends that the industry should be on the lookout for.
The website Ballotopedia is tracking over a dozen proposed marijuana legalization initiatives as of September. Banks located in states without a legal marijuana program, including adult or medical, may see that change by the end of 2022 and need to start planning now for how this could affect your bank.
There’s no guarantee that any federal marijuana legislation will pass in 2022.
There are currently two major proposed bills that would loosen federal policy toward marijuana — the Secure and Fair Enforcement Banking Act (SAFE Banking Act) and the Cannabis Administration and Opportunity Act (CAO Act). The most attractive to banks is the SAFE Banking Act, which would ensure federal regulators could not take adverse action against banks that provide services to state-legal MRBs. It would also require the Federal Financial Institutions Examination Council to establish uniform exam guidelines for evaluating marijuana banking programs. This legislation passed the House of Representatives by a comfortable margin in 2020 and again in 2021, and Senate leadership has made it clear that passage of the CAO Act is their priority.
Read the full article here — What to Know About Cannabis Banking in 2022 | Bank Director
Webinar: The True Value of Digitally Transforming Credit Risk Management | A Bank’s ViewFrom S&P Global Market Intelligence
Credit and risk management professionals face numerous challenges every day. Volatile market conditions, increased competition from Fintech firms and fears of cybersecurity breaks are just some of the market pressures that have increased the need to work faster and smarter than ever before.
Join us for a deep dive into how banks around the world are tackling the need to digitally transform their risk management practices with a specific focus on credit risk assessment and monitoring. We’ll share the key drivers for digital transformation, as well as:
- What banks are really trying to achieve
- Aligning data to unlock advanced capabilities
- How to technologically enable risk assessment
- Explore advanced portfolio monitoring
Register for this on-demand webinar here — The True Value of Digitally Transforming Credit Risk Management | A Bank’s View - Registration (spglobal.com)