Regulators Recalibrate Reputation Risk Stance in Final Rule

Matthew Bornfreund spoke with S&P Capital IQ about the Federal Deposit Insurance Corp. (FDIC) and Office of the Comptroller of the Currency's (OCC) clarification of the definition of reputational risk. According to the final rule, certain operational risk events outside a bank’s control could impact its reputation and financial condition. This clarification gives the agencies leeway to monitor events that may trigger reputational risk, but in a more measurable way.

Matthew noted that this amendment "preserve[s] some flexibility for their examiners, but I don't see this as a major concession or reversal."