While the overall strength of the federal banking system is sound, banks should be “on the balls of their feet” regarding risk management, the OCC said in its latest Semiannual Risk Perspective.

Industry Strength: In its spring 2023 risk report and in remarks from Acting Comptroller of the Currency Michael Hsu, the agency said most banks are avoiding complacency, re-evaluating exposures, preserving capital, and maintaining liquidity.

Risk Warnings: But the OCC’s report warns about signs of credit risk relating to commercial real estate, elevated operational risk from cyber threats, compliance risk in a dynamic environment of changing products and services, and “technology debt” from legacy systems and deferred IT maintenance.