Compliance officers at financial institutions are very familiar with MRAs and likely want to avoid them at all costs. So, what exactly is an MRA and why does it often cause alarm?
When it comes to vendor management and regulatory exams, MRA stands for “matter requiring attention” and means that the Office of the Comptroller of the Currency (OCC) has found deficiencies within a bank’s practices. In other words, you need to pay attention and act quickly!
What It Looks Like
An MRA is issued by a formal written communication to the board and may look like a detailed memo or a portion of a larger report, depending on the complexity and scope of the vendor management deficiency.
In addition to the deficiency, an MRA may detail the expectations and required timelines for acting. For example, it may state “within 90 days of the receipt of this, the board must formally approve a third-party risk management program” and provide future expectations for the next examination.
Keep in mind that MRAs are highly confidential, so don’t share the information with others.
What It Means
Think of an MRA as a big warning sign that needs to be addressed immediately. If the MRA isn’t prioritized or is ignored altogether, you’ll likely be facing some serious consequences during the next exam. You should expect further discussion on how your organization addressed the concerns so make sure to document the remediating activity in your board-level minutes.
MRAs are generally very detailed and rigid, but it’s important to ask questions if you have any uncertainty on what needs to be done. Additionally, it’s helpful to review the regulatory guidance on the focus of MRAs which can be found in the OCC’s Bank Supervision Process, Comptroller’s Handbook.
As detailed in the Supervisory Actions section, MRA's are communicated with the following Five Cs format:
- Concern: This describes the deficiency and how it departs from safe and secure governance, internal control or risk management principles. Multiple concerns may be identified in a single MRA.
- Cause: The root cause is noted, when apparent. Corrective action may be identifying the root cause.
- Consequence: This area explains how the bank’s financial performance or risk profile will be affected by the deficient practice.
- Corrective action: This describes what must be performed by management or the board to address the concern.
- Commitment: This refers to the action plan that will be used to manage the deficiency and includes details on milestones, completion date and the staff who will implement the actions. If the organization can’t provide an action plan during the exam, the OCC will accept a board-approved plan within 30 days of receiving the MRA.
Top 5 MRA Categories for Financial Institutions
To gain a better understanding of different types of MRAs, here’s a list of the top 5 categories noted in the OCC Semiannual Risk Perspective Spring 2021 report:
- Operational (40%)
- Credit (25%)
- Compliance (23%)
- Strategic (6%)
- Liquidity (3%)
Receiving an MRA is probably something no one wants to face, but it’s important to address in a timely manner. Failing to correct MRAs can ultimately lead to enforcement actions so act quickly!
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