Impacted Domains: Operational, Financial, Reputational
Impacted Industries: Banking, Financial Services
Date: August 5, 2025

BLUF:
Exam delays, stricter oversight, and staffing cuts are disrupting regulatory audits — elevating compliance, financial, and reputational risk for financial institutions.

So What:
Firms are experiencing increased audit failures, penalty exposure, and strained regulator relationships as exam backlogs and inconsistencies escalate. Gaps in documentation, controls, and preparedness amplify downstream operational and reputational impact.

Risk Value:
$1M–$15M for mid-size firms, depending on findings, penalties, and remediation scope.

Mitigation Cost:
$200K–$2M for mid-size institutions to modernize controls, documentation, and exam readiness.

What to Do:

• Strengthen and centralize compliance documentation to ensure exam-ready evidence.

• Train staff on examiner expectations and exam workflows.

• Upgrade fraud, payments, and AML controls to reduce findings and recidivism.

• Review vendor risk exposure and run tabletop drills for exam disruption scenarios.

• Proactively communicate with regulators to clarify expectations and reduce uncertainty.

Risk AIQ Score: 8