The Office of the Comptroller of the Currency (OCC) has announced a significant policy reversal by withdrawing its participation in the established interagency principles designed to manage climate-related financial risks for large financial institutions.
This move comes as the OCC deems these guidelines to be overly demanding and redundant.
Acting Comptroller of the Currency Rodney E. Hood explained that the existing regulatory frameworks already encompass comprehensive risk management, capable of addressing a range of scenarios including severe weather events or natural disasters. “The principles providing guidance to banks for climate-related financial risk are overly burdensome and duplicative. The OCC’s existing guidance for banks to maintain a sound risk management framework applies to all activities conducted by supervised institutions and includes potential exposures to severe weather events or natural disasters,” Hood said. He also mentioned his ongoing commitment to refine regulatory demands to ensure they are effective and not excessively stringent, whilst upholding the safety, soundness, and fairness of the federal banking system.
The OCC has clarified that it expects all banks to implement robust risk management processes that are in alignment with their size, complexity, and the nature of their operational risks. This policy withdrawal signifies a shift in the regulatory approach to climate-related financial risk, potentially impacting how banks strategize their risk management going forward.
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