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OCC BULLETIN 2016-4
Subject: Country Risk Management
Date: February 12, 2016
To: Chief Executive Officers of All National Banks and Federal Savings Associations, Department and Division Heads, All Examining Personnel, and Other Interested Parties

Description: Revised Comptroller’s Handbook Booklet

Summary

The Office of the Comptroller of the Currency (OCC) issued today the “Country Risk Management” booklet of the Comptroller's Handbook. This revised booklet replaces the booklet of the same title issued in March 2008.

This booklet is prepared for use by OCC examiners in assessing a bank’s exposure to country risk and includes procedures to evaluate the adequacy of the bank’s country risk management framework. Country risk management topics include board and management oversight; policies and procedures; country exposure reporting system; country risk analysis process; country risk ratings; country exposure limits; monitoring country conditions; stress testing and integrated scenario planning; and independent risk management, internal controls, and audit.

Note for Community Banks

This booklet applies to examinations of all national banks and federal savings associations (collectively, banks) with exposure to country risk. In midsize and community banks, examiners typically perform a country risk review in conjunction with an examination of trade finance and services.

Highlights

This booklet

  • provides updated and expanded guidance and examination procedures to examiners concerning country risk management.
  • reflects lessons learned from the financial crisis of 2008 and the European banking and debt crises.
  • updates the risks associated with international activities by providing more in-depth discussion of the effects of country risk, cross-border risk, and sovereign risk on the OCC’s eight risk categories (credit, interest rate, liquidity, price, operational, compliance, strategic, and reputation).
  • adds an internal control questionnaire and a glossary.
  • expands the sample request letter.
  • addresses the risk management of third-party providers.

The issuance of this booklet makes OCC Bulletin 2002-10, “Country Risk: Sound Risk Management Practices,” applicable to federal savings associations.

For further information, contact Teresa Rutledge, Director for International Banking Supervision, at (202) 649-6210.

 

Martin Pfinsgraff
Senior Deputy Comptroller for Large Bank Supervision

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