TraceRiskSILOComplianceCorrespondent Bank Concentrations

Correspondent Bank Concentrations

Use Case for Assessing Risk on Correspondent Bank Concentrations

Why assess the risk? Financial institutions should implement procedures for identifying correspondent concentrations so that there is no over-reliance on or disproportionate deposit balance at a single depository bank. For prudent risk management purposes, these procedures should encompass the totality of the institution’s aggregate credit and funding concentrations to each correspondent on a standalone basis, as well as taking into account exposures to each correspondent organization as a whole. In addition, the institution should be aware of exposures of its affiliates to the correspondent and its affiliates.

Who should assess the risks? Chief Financial Officer, Controller, Accounting Mgr., Chief Operating Officer, ALCO

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.
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