According to the Treasury Department's Office of the Comptroller of the Currency (OCC)'s semi-annual risk report, resilience management teams at financial institutions need to do more to make sure that their companies are ready to handle new risks.

The OCC's biannual report suggested that compliance and operational resilience regulation needs to step up its evaluation and response to operational risks like cyber fraud, identity theft, and using fake records.

History of OCC

The 2008 financial crisis prompted a closer look at the OCC and a new role. Changes improved its risk management through effective resilience management. Federal authorities saw more of the OCC's market management and oversight. Due to closer scrutiny, some regulatory organizations awarded the group low scores.

In 2013, the SEC questioned the OCC's management and plan for dealing with problems across the market. The SEC also said that the OCC's management was not properly supervised by corporate governance at the time. Additionally, the SEC raised concerns about the group's commitment to following the rules, citing other potential conflicts of interest with the board of directors and management.

Current Leadership

The current OCC leadership to monitor operational resilience through resilience management for FIs includes the following people:

• Craig S. Donohue: Craig S. Donohue spent over 20 years in global financial markets before joining the organization. The OCC named him executive chair in 2014. In addition to Harvard Business Review and Institutional Investor Magazine, he was CME Group CEO from 2004 to 2012.
• John P. Davidson: OCC CEO John P. Davidson oversees technology, safety, and business and financial risk. In 2019, the OCC appointed Davidson CEO three years after hiring him as president and COO. He has approximately thirty years of experience in global financial markets, according to his rsum.
• Scot Warren: Scot Warren is the company's EVP and COO. He oversees the OCC's finances, project management, HR, and functions. Warren was a senior managing director for the CME Group index and stock product.

Strengthening Operational Resiliency in Financial Services

Following the law is important for any financial service business to have a good operational resilience framework that also wants to be successful, which brings up the question of what role legal compliance really plays in banking.

Protecting Investor Interests

Often, buyers are the weakest links in the financial environment. Compliance with government rules means that financial institutions work to protect clients. Under FINRA's appropriateness rule, investment experts must, for example, prescribe financial options that meet the unique needs of each client. Prior to giving any financial advice, they need to fully understand the proposal's possible risks and rewards, taking into account factors that are unique to the customer, such as:

• Investment goals
• Risk tolerance
• Income and net worth
• Current financial status and needs
• Investment time horizon

This rule promotes professional ethics in the financial field by requiring that people working in a business with a good operational resilience framework world always act in good faith when helping clients. You have to follow this rule legally, and doing so also helps build trust between banking institutions and their users.

Enhancing Transparency

Financial sector rules make corporations more transparent to investors, enhancing client-business interactions and confidence. For instance, the SEC requires enterprises that offer bonds, stocks, and investment contracts to disclose all relevant information to investors, which must be accurate and current.

Moreover, fidelity managers and broker-dealers must fully and properly disclose any conflicts of interest before offering an investment product or giving financial help to a client. In a conflict of interest, financial experts promote a product without considering what is best for buyers, possibly because doing so would make them more money.

According to the SEC, buyers should be able to make smart decisions about financial advice after being informed about conflicts of interest with the help of operational resilience regulation. However, failing to report or deal with conflicts of interest could be against the law and lead to government penalties.

Avoiding Penalties

Avoiding legal issues that could hurt a business's reputation or lead to huge fines is one of the most important parts of regulatory compliance. Noncompliance penalties may change if:

• The nature and severity of the violation
• The regulatory framework in place
• The business size

Compliance with financial services rules helps ensure that money meant for fines is spent on businesses with an operational resilience framework that makes money instead. By following strict compliance through operational resilience, you can save annual costs as well.

Challenges In Operational Resilience Regulation For FIs

Restrictions on the banking business have grown significantly since the financial disaster of 2008, making it increasingly difficult for financial institutions to keep up. Furthermore, as companies switch from paper-based to digital processes, new technologies like artificial intelligence have created more legal needs.

Recently, one of the most important problems has been keeping customer info safe online. With more people using digital payments and mobile banking apps, financial technology companies have an even bigger duty to protect their customer's private financial information and data. To keep data protected, companies need to improve their operational resilience regulations and hire cybersecurity teams with multi-factor authentication to protect them whenever possible.

Moreover, financial sector businesses might work with regulatory technology companies to stay on top of changes in resilience management and compliance. Companies must follow the rules and start using technology to refrain from risk.