On December 8, 2022, the OCC released the Fall 2022 edition of its publication Semiannual Risk Perspective. This edition reports key issues facing the banking industry and the lingering effects from the pandemic and shocks from Russia’s invasion of Ukraine on the industry. According to the report, economic growth slowed sharply in 2022, while high employment rates supported consumer spending and overall bank performance.
The report also highlights the following regarding credit, strategic, operational, and compliance risks:
Bank investment portfolios have been adversely affected by the rising rate environment, resulting in portfolio depreciation.
Operational risk is elevated as banks respond to an evolving and increasingly complex operating environment. Cyber threats continue to evolve, with threat actors continuing to target the financial services industry with ransomware and other attacks.
Compliance risk remains elevated as banks continue to operate in an increasingly complex environment.
The quantity of credit risk in commercial and retail loan portfolios is moderate and is attributed to growth and utilization trends and economic uncertainty. Loan portfolio performance has been resilient, but signs of potential weakening in some segments warrant careful monitoring.
The full publication can be found here.