Use Case for Assessing Risk on Community Reinvestment Act (CRA)
Why assess the risk? It has always been in a bank’s best interests to reinvest in the communities it serves, regardless of the size and orientation of the institution. The FFIEC provides some guidance for achieving goals and objectives that are explicitly and implicitly set forth in CRA regulations. Examiners will consider the responsiveness to credit and community development needs as well as the innovativeness and complexity of the bank’s community development lending, qualified investments and community development services. To avoid regulatory criticism and attain and hold the status of being a good corporate citizen, a bank should objectively assess its risk profile regarding CRA.
Who should assess the risks? Board of Directors, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, CRA Officer, Compliance Officer
How to assess the risk: Rate the KRIs to determine if a threat would successfully exploit a vulnerability and to justify expenditures to implement countermeasures to protect the bank’s assets or reputation. Use the “Focus Risk Assessment” tool for in-depth analysis of risks and mitigation techniques.