Strategic Planning as a Regulatory Expectation and Some Useful Tools
In speech delivered to the National Bankers Association on October 1st, OCC Comptroller Tom Curry emphasized the importance of strategic planning. Although his remarks were addressed to minority-owned institutions, they are very applicable to banks of all sizes, particularly community banks, and worthy of consideration by bank boards of directors.
In particular, Comptroller Curry highly recommended that banks conduct strategic planning as a means to identify who they are, what are their strengths and weaknesses, what they can realistically accomplish, and what success should look like for their institution. Strategic planning can help define how the bank wants to position its business and service activities, identify its best opportunities, and provide guidance when you need to make hard choices about the unknown and uncontrollable.
Comptroller Curry went on to point out that a variety of analytical tools are available to help banks with both quantitative and qualitative assessments of their company. He stressed, however, that it is important to rely on more than one assessment tool. Moreover, the OCC has developed some tools to help OCC-supervised community banks with this process. For example, its BankNet web service lets every bank compare its performance with a peer group that it selects. BankNet also contains tools that allow banks to stress test their commercial real estate portfolios. In addition, he directed attention to a guide that OCC has posted online titled, “A Common Sense Approach to Community Banking.”
This guide addresses strategic planning and the equally important topics of capital planning and enterprise risk management. This booklet provides an overview of the Risk Assessment System that OCC uses to guide its exam teams, a very important tool used by the OCC. The Risk Assessment System is designed to identify and measure current and prospective risks by establishing a common framework to evaluate eight different categories of risk. Finally, Comptroller Currency noted that the OCC will soon post a strategic planning presentation on BankNet. You may find the complete text of the Comptroller’s remarks on strategic planning here.