Exceeding NCUA & FDIC Examiner Expectations

In this blog, we’ll explore strategies to help banks and credit unions meet and exceed examiner expectations.

Given the rigorous standards of the financial industry, standing out requires a proactive and comprehensive approach to security and compliance. We aim to provide you with actionable insights and best practices to navigate these challenges. The four key areas we’ll focus on in this blog include Risk Assessments, Board Reporting, Compliance & Control Testing, and AI Security. 

Risk Assessments: Beyond the Basics

Risk assessments are fundamental to identifying, evaluating, and mitigating potential threats to your institution. But to exceed examiner expectations, it’s essential to go beyond the basics.

Living, Breathing Document

Think of risk assessments as living, breathing documents—they should be continuously updated and refined to incorporate new information, emerging threats, and regulatory changes. Neglecting to regularly review and update your risk assessments can quickly render them obsolete, exposing your institution to unforeseen risks and lead auditors to believe that cybersecurity isn’t a top priority for your organization.

Updating/Changing Controls Periodically

To ensure the effectiveness of your risk management program, it's crucial to periodically update and change controls. This involves reviewing existing controls to determine if they are still effective, identifying areas where controls need to be strengthened, and implementing new controls as necessary. Regularly updating your controls helps in adapting to new risks and maintaining a robust defense against potential threats.

Board Reporting: Clarity and Transparency

Effective board reporting is crucial for maintaining transparency and ensuring that your board members are well-informed. Examiners look for clarity, accuracy, and comprehensiveness in your reports.

Avoid Vanity Metrics

Focus on metrics that offer genuine insights into your institution's performance and risks, such as those related to risk management, compliance, and strategic objectives. Avoid reporting vanity metrics, like email phishing attempts, which may look impressive but lack substantive value. This approach ensures that board members can make well-informed decisions based on robust data rather than superficial indicators.

Actionable Insights 

Focus on providing actionable insights rather than just raw data. Highlight trends, potential risks, and recommended actions to enable informed decision-making.

Correct Reporting Frequency

While an annual review is a baseline requirement for reporting to banks and credit unions, it's beneficial to supplement it with more frequent updates. Quarterly or monthly updates provide a timely and comprehensive overview of your institution’s performance and risk profile, allowing the board to stay informed and proactive in addressing emerging issues. Additionally, ensure compliance by titling the annual report appropriately and including all necessary regulatory requirements. 

Compliance & Control Testing: Proactive and Thorough

Compliance and control testing should be seen as an ongoing process rather than a periodic task. Implement continuous monitoring and improvement mechanisms to stay ahead of regulatory changes.

Not Aligned to Internal Control Framework

It's important to set up an internal framework that's different from what your auditors use for testing. The specific framework (NIST, CIS, ISO) isn't as important as ensuring it's separate. For instance, credit unions shouldn’t solely rely on NCUA ISE statements; a secondary framework is necessary. The same goes for banks and their FFIEC exams. Once these frameworks are established, we advise mapping them back to the exam statements for comprehensive coverage.

Accurate Third-Party Review 

Ensure that all findings from compliance and control testing are thoroughly documented and that corrective actions are promptly implemented. Regularly follow up on outstanding issues to ensure they are resolved.

*Documentation and Follow-Up

While an annual review is a baseline requirement for reporting to banks and credit unions, it's beneficial to supplement it with more frequent updates. Quarterly or monthly updates provide a timely and comprehensive overview of your institution’s performance and risk profile, allowing the board to stay informed and proactive in addressing emerging issues. Additionally, ensure compliance by titling the annual report appropriately and including all necessary regulatory requirements. 

AI Security

As banks and credit unions increasingly adopt artificial intelligence, it’s crucial to understand and get ahead of potential risks. AI can enhance security, but it also introduces new vulnerabilities.

Internal AI Policy

Implementing an internal AI policy is critical to managing the ethical and operational aspects of AI usage within your institution. This policy should outline the acceptable use of AI technologies, ensuring they align with your institution’s values and regulatory requirements. It should cover data governance, transparency, accountability, and ethical considerations. Regular training and awareness programs should be conducted to ensure all employees understand and adhere to the AI policy, thereby fostering a culture of responsible AI use. To learn more about developing an internal AI policy check out our blog “Preparing for NCUA and FDIC AI Requirements”. 

Lean On The Rival Platform

Our platform is built with compliance, risk management, and security in mind. It simplifies evidence collection, efficiently manages and tracks findings, and provides clear, concise overviews. This helps enhance cybersecurity programs, earning positive feedback from both the board of directors and auditors.

Eliminate the manual work from your yearly IT audits, impress your board, and reduce organizational resources with our platform. Schedule some time with someone on our team to learn more!