Operational Risk Management: An Evolving Discipline
Growing complexity in the banking industry, several large and widely publicized operational losses in recent years, and a changing regulatory capital regime have prompted both banks and banking supervisors to view operational risk management (ORM) increasingly as a distinct discipline, just like management of credit risk and market risk. This article provides an introduction to operational risk, outlines the current state of ORM, and describes different quantification approaches in this emerging field
Banks and Hurricanes: A Look Back at the Storms of 2004 2005
As the hurricane season of 2006 approaches, we look back at some of the challenges bankers faced during the storms of the 2004-2005 seasons, which may provide context for bankers when they review plans for maintaining operations in the event of a disaster. This article is an informal compilation of experiences and thoughts about the challenges and planning options illustrated by those experiences.
Enforcement Actions Against Individuals: 2005 A Year in Review
Third in a series about the enforcement action process as it applies to individuals, this article summarizes enforcement actions brought against individuals during 2005, with a particular focus on losses to banks resulting from insider misconduct or fraud. The article highlights the importance of strong oversight of operating management and reemphasizes the need for strong internal control and audit programs
From the Examiner’s
Desk... Two Years After: Assessing the Impact of the New HMDA Reporting Requirements
The Federal Reserve Board's latest revisions to data collection and reporting requirements for Regulation C, the implementing regulation for the Home Mortgage Disclosure Act (HMDA), allow examiners to conduct more precise analyses than in the past. This article focuses on how the changes to Regulation C have affected fair lending examinations and the HMDA examination process. It also explores the most common HMDA violations cited since the changes were implemented.
Capital and Accounting
News... Accounting for Employee Stock Options
On January 1, 2006, the accounting rules for employee stock options changed. On that date, Statement of Financial Accounting Standards No. 123 (Revised), Share-Based Payment, took effect for entities with a calendar year fiscal year and eliminated an entity's choice between two significantly different methods of accounting for employee stock options. This article discusses the key provisions of this new accounting standard and its effect on banks' reported earnings and capital levels.
Supervisory Insights is published by the Division of Supervision and Consumer Protection of the Federal Deposit Insurance Corporation to promote sound principles and best practices for bank supervision.
Martin J. Gruenberg
Sandra L. Thompson
Acting Director, Division of Supervision
and Consumer Protection
Journal Executive Board
John M. Lane, Deputy Director
Robert W. Mooney, Acting Deputy Director
William A. Stark, Deputy Director
John F. Carter, Regional Director
Stan R. Ivie, Regional Director
James D. LaPierre, Regional Director
Sylvia H. Plunkett, Regional Director
Mark S. Schmidt, Regional Director
Christopher J. Spoth, Regional Director
Bobbie Jean Norris Managing Editor
Christy C. Jacobs Financial Writer
Eloy A. Villafranca Financial Writer
Supervisory Insights is available online by
visiting the FDIC's website at www.fdic.gov.
To provide comments or suggestions for future articles or to request permission
to reprint individual articles, send an e-mail to firstname.lastname@example.org.
To request print copies, send an e-mail to email@example.com.
The views expressed in Supervisory Insights are
those of the authors and do not necessarily reflect official positions of the
Federal Deposit Insurance Corporation. In particular, articles should not be construed
as definitive regulatory or supervisory guidance. Some of the information used
in the preparation of this publication was obtained from publicly available sources
that are considered reliable. However, the use of this information does not constitute
an endorsement of its accuracy by the Federal Deposit Insurance Corporation.