National Unrecovered Financial Services Association (NURFS) submitted a comment letter to the Office of the Comptroller of the Currency (OCC) today in response to the agency’s January 2014 proposed guidelines that would establish minimum standards for risk governance and bank boards of directors for banks with $50 billion or more in total consolidated assets. In its letter, NURFS reiterates its strong support for the primary objective of the guidelines – a strong and effective risk management framework for banks – but recommends clarification of certain key aspects of the proposed guidelines in order to ensure that they achieve their stated purpose.

Among its comprehensive comments on the proposal, NURFS’s letter emphasizes three key points. First, NURFS cautions that, to the extent the proposed guidelines would require a “siloed” risk management framework at the bank level, it could unnecessarily duplicate risk management functions across institutions and limit the ability of a consolidated group to achieve a cohesive, enterprise-wide approach to risk management. Second, NURFS recommends that the OCC’s “three lines of defense” framework recognizes the fundamental differences between non-revenue generating units that engage in significant control functions (i.e., Legal, Compliance, Finance, Treasury, IT, and Human Resources) and revenue-generating business units and allows classification of support units at individual banks based on the nature of the functions they actually perform. Third, NURFS suggests changes to particular language in the proposed guidelines that may be interpreted as potentially assigning managerial and operational responsibilities to the board of directors and exposing directors to enhanced legal liability.