In June, 2023, a trio of federal agencies (the Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency) issued guidance to banks and other financial institutions (the “TPRM Guidance”) to help those organizations manage downstream, third-party risks. The federal guidance did not mandate or codify procedures, but rather was intended it to inform financial institutions about recommended best practices for due diligence in navigating the complexities of risk mitigation.

Perhaps recognizing that TPRM guidance focused on larger institutions, in May 2024 the same agencies released similar guidance directed specifically toward community banks (the “2024 Guidance.”)1 While community banks may not employ as robust a risk management organization as larger financial institutions, they face the same pressures to manage risk. Accordingly, many themes of the two sets of guidance dovetail. However, several key aspects of the 2024 Guidance specific to community banks warrant mention.

...

To read this full article, download PDF.