How to Improve Your Community Bank’s Risk Assessment Methodology

by | Aug 13, 2020 | Managed Services, Security


Cybersecurity is one of the most important areas of concern for any bank or financial institution. For this reason, all FDIC-insured institutions are required to go through a rigorous cybersecurity audit every year. Prior to this audit, an assessment needs to be made to ensure that the institution is prepared and in compliance.


As an IT manager or CIO of a financial institution, are you familiar with what really goes into your bank’s risk assessment? Do you have open or unresolved audit findings from your prior exam? Do you currently have a bank risk assessment methodology that is robust enough to ensure that your institution is in compliance and completely ready for an audit?



What Goes Into a Risk Assessment?

There are very important reasons for staying up to date on your risk assessment process. Regulation in the industry will continue to deepen and broaden. Customer expectations are rising, in parallel with the rapid change in technology. Advanced analytics and technology are constantly evolving. As this evolution takes place, new risks emerge.

A solid financial institution risk assessment methodology should keep in mind all of the above and evolve as new risks emerge and technology changes. Here are a few of the important items that are a part of a good risk assessment:

Identify specific categories of risk:

  • Which products and services could cause more risk?
  • Customers and entities need to be categorized on a scale of low to high risk.
  • Geographic locations should be categorized according to their risk.

Deep-dive into identified categories:

  • Define each product or service and customer relationship.
  • Determine how to deal with each.
  • Determine the acceptable level of risk for each.

Acceptable risk level and mitigation efforts:

  • What are the processes, policies, and procedures you have in place to mitigate risk?
  • How are you going to manage those items that are an acceptable risk?
  • Assessments need to take the following into consideration:
    • Policies and procedures
    • Board of directors and senior management
    • Technology and security
    • Roles and responsibilities
    • Inventory
    • Documentation
    • Internal controls
    • Internal audits

A deep understanding of all of the above is essential to crafting a risk assessment methodology that can change and evolve with the changing times and technology. Banks and financial institutions of all size and complexity often look to outside help to ensure they fulfill compliance objectives and minimize risk.

Partnering with an Expert

Many community banks have leaner IT teams that may not have the knowledge and expertise for a risk assessment that will fully prepare them and establish good cybersecurity posture. Risk assessments require in-depth knowledge of both the financial industry and today’s cybersecurity landscape. Financial institutions that don’t have the time, money, and expertise to devote to a thorough assessment risk leaving security and compliance gaps unchecked.

Perhaps you have handled your bank risk assessment in-house in the past. What were your major pain points? Does your bank have the resources to run its risk assessments in-house, or would you like to be able to rely on a provider who knows your pain points and can help ease them?

Peters & Associates is a family-owned managed service provider that knows the ins and outs of technology and how it relates to your financial institution. We continue to navigate the changes brought on by industry and market conditions as well as customer preferences. We hold a strong, proven bank risk assessment methodology, and we can help you create a bank risk assessment methodology that improves your institution’s cybersecurity and makes sense for your business.

While the best defense is a good offense, no security plan is complete without an action plan for the worst-case scenario. As you continue honing your bank’s security posture, download the Incident Response Plan (IRP) Checklist to ensure you’re covered on all fronts.

Download My Incident Response Plan (IRP) Checklist