All of us who work at a financial institution expect a regulatory exam periodically, but even though we expect them, we feel a moment of dread in the pit of our stomachs when we receive the exam notification. I remember those days. My first thought was “the examiners just left.” But, in fact, they had been gone for some time. To help with the overall process, we need to manage the exams so examiners can get in and out as soon as possible.
To help minimize the overall stress of an exam, it is always best to establish an Enterprise-Wide Exam Management Program for your institution. A consistent internal process among the various departments will afford you the ability to define how you want to handle the pre-exam, the exam and the post-exam. It will also provide a message to your examiners that this is the framework your institution will follow during the exam, so they will know what to expect when they engage your institution.
Many of us who have managed exams for years know that we generally:
- Prepare an exam plan
- Gather and organize all requested items
- Prepare exam responses
- Coordinate internal meetings and meetings with examiners
- Track the status of regulator requests and submissions
- Monitor and report exam status, including any potential issues
- Assist in the resolution of any regulatory concerns
- Centralize exam management record retention
- Foster relationships with examiners
- Monitor regulatory trends
While this is a general overview of all we do for an exam, there is so much more to consider. A key task that we perform from exam to exam is ensuring we are compliant with regulations. One way we do this is by reviewing prior exams and audits to ensure items previously noted have been corrected. We also review policies and procedures to minimize any potential gaps and assess the institution’s performance in regulatory “hot spots.”
As exam managers, we must remain focused on providing clear documentation because our objective is to demonstrate to our examiners that we are compliant and have a culture of compliance. This is achieved by providing clear and concise answers to regulatory requests as well as questions raised by the examiners. The less time an examiner spends digging through your records, the fewer errors they are likely to find. Remember, a little extra work in preparation may minimize a headache during the exam.