Final answer:
The Office of the Comptroller of the Currency (OCC) uses a third-party risk management framework involving the lifecycle steps of identify, assess, control, and monitor to ensure that national banks and federal savings associations maintain sound third-party relationships.
Step-by-step explanation:
The Office of the Comptroller of the Currency (OCC) is part of the U.S. Department of the Treasury, which takes responsibility for supervising, regulating, and examining national banks and federal savings associations. The OCC has a framework in place to address third-party risks that banks might encounter through their business relationships. This framework involves a lifecycle approach, which aligns with one of the four options provided: Identify, assess, control, and monitor. Here is a brief outline:
- Identify: Recognizing and understanding the potential third-party relationships that a bank might enter into.
- Assess: Evaluating the risks and benefits associated with a third-party relationship.
- Control: Establishing policies and procedures to manage the risks identified during the assessment process.
- Monitor: Overseeing the third-party relationship on an ongoing basis to ensure that risks are managed effectively.
While the OCC is focused on regulation and oversight, the third-party risk management lifecycle ensures that national banks and federal savings associations maintain sound practices, particularly when engaging with external entities.