Risk management and governance rules like the OCC’s Heightened Standards have altered the way that large banks operate in the financial sector. No longer seen as “best practice”, these guidelines are now obligatory and require covered banks to implement a robust risk governance framework built around the three lines of defense, including:

  • A formal risk appetite
  • Rigorous risk data aggregation and reporting
  • An actively engaged board

Compliance teams for large banks are integrating generative AI to comply with the OCC heightened standards.

Continue reading to understand more about the challenges that large banks face, how generative AI software can help alleviate these challenges, and how to integrate this technology into a scalable solution for your organization.

OCC Heightened Standards: What They Require

Before we begin analyzing the needs of large banks, we can look at what the OCC Heightened Standards guidelines stipulate and set minimum standards for, as well as which institutions constitute “covered banks”. Heightened Standards require large banks (recently classified by the OCC as those with over $700 billion in assets, up from $50 billion) to abide by the following:

  • A risk framework that clearly distinguishes the following:
    • Front line units
    • Independent risk management
    • Well-defined internal audit procedure
  • A written risk appetite statement that articulates aggregate and granular risk-taking limits and includes:
    • Front-line unit limits
    • Concentration limits
    • Breach processes
  • Policies, procedures, and infrastructure to provide accurate, timely, complete, and adaptable risk data and reporting
  • Proper board oversight of all risk-taking that includes an understanding of material risks and provides “Credible Challenge” to management
  • Internal audit standards for independent assessment of the effectiveness of the risk governance framework and control environment
  • Detailed issues management that reinforces a sound risk culture

Compliance Challenges for Large Banks

Larger banks by nature manage more assets, requiring more complex compliance procedures to be put into place. Some of the common challenges that larger banks could face include need to:

  • Translate a very prescriptive set of standards into a coherent operating model
  • Build risk appetites using legacy technology and siloed data
  • Enable boards to provide “credible challenge” easily and efficiently
  • Meet extensive documentation and reporting expectations

Many larger banks may have their own complex challenges that overlap or require custom solutions. These can be addressed through a consultation and demonstration done with our team.

Managing Risk Using a GenAI Solution

The major benefit of integrating a generative AI solution is that many processes that have been traditionally manual can be automated, freeing up valuable team resources and saving time and costs.

Browse through the table to learn some of the ways in which AI-driven software can elevate operations across business units for larger banks to comply with the OCC’s Heightened Standards now and in the future.

OCC Heightened Standards Typical Bank Pain Points How GenAI Can Help
Risk appetite and limits Vague statements and weak linkage to metrics Draft clearer appetite statements and align policies and limits to appetite
Data aggregation and reporting Fragmented data that needs to be manually reconciled Automate data extraction and generate draft risk reports
Regulatory change management Manual monitoring, siloed impact assessments, and slow policy updates Continuously monitor risk and automatically update policies
Internal audit and issues management Manual scoping, testing, and reporting Draft findings, and easily classify and track issues

These are just some of the possible use cases for generative AI technology when it comes to compliance management.

Using Predict360 to Meet OCC Heightened Standards

Finding the best solution for your institution is made easier with multiple integrations found in one risk and compliance management platform. Predict360 offers large banks various customizable modules, comprehensive risk libraries and continuous regulatory change monitoring to ensure that compliance teams are always aware of emerging guidelines.

The Predict360 platform along with the Ask Kaia AI assistant is designed specifically to meet these more complex requirements:

What OCC Expects How Predict360 Helps Large Banks
Integrated view of risks, controls, issues and audit functions Provides a unified, AI augmented GRC platform that integrates risks, controls, KRIs, audits, exams, policies, training, and issues.
Documented risk appetite and timely identification of breaches Delivers configurable risk registers, taxonomies and KRI/KPI monitoring with dashboards and alerts.
Timely, accurate, complete risk reports to the board Centralizes risk and compliance data and leverages embedded BI for real‑time dashboards and drill down reporting.
Tracking of regulatory changes and their impact Uses AI‑powered regulatory intelligence feeds to automatically capture regulatory updates, assess impact, link changes to obligations, policies and controls, and manage change workflows with full audit trails.
Documented testing, monitoring and issue remediation Automates compliance testing schedules, workpapers, and closing memos; maps tests and issues to specific regulations and risks; tracks remediation activities and exam findings in a single system.
Governance and monitoring of third party risks, performance and compliance Offers a dedicated Third‑Party Governance module to register vendors, track reviews, complaints, change requests, and monitoring, with configurable workflows, alerts, and dashboards.
Demonstrable risk culture and training Integrates training and learning management with risk/compliance activities, tracks completion, and provides role‑based dashboards and reports.

Get in touch with our team to learn more about the best solution for your organization or request a demo to test this solution with your team.