01. Credit Risk
Credit risk is evolving in 2025. Commercial credit risk is rising due to sustained high interest rates, geopolitical uncertainty, and sector-specific stress in commercial real estate, particularly in office and hospitality segments. While retail credit remains stable, slowing wage growth and weakening consumer sentiment may pressure borrowers. Banks should enhance credit surveillance and proactively assess refinance and default risks across portfolios.
Source: OCC Semiannual Risk Perspective Spring 2025
02. Market Risk
Market and liquidity risk remain stable, with net interest margins improving in late 2024 as federal funds rate cuts eased funding pressures. Asset-based liquidity held steady, and deposit levels stabilized, though competition for deposits continues to require close attention.
Unrealized losses in investment portfolios persist, reinforcing the need for banks to maintain strong interest rate risk modeling and stress testing to navigate ongoing inflation and rate uncertainty.
Source: OCC Semiannual Risk Perspective Spring 2025
03. Operational Risk
Operational risk remains elevated as banks navigate complex technology demands and rising fraud threats.
Institutions face pressure to modernize legacy systems or risk losing ground to faster, digital-first competitors. Cyber threats and fraud, especially involving checks, wire transfers, and peer-to-peer platforms, continue to evolve, often targeting banks and third-party providers. These trends underscore the need for strong operational resilience, strong and mature third-party risk management, and ongoing investment in secure, scalable infrastructure.
Source: OCC Semiannual Risk Perspective Spring 2025
04. Compliance Risk
Compliance risk remains elevated, driven by rising fraud activity, increased account access issues, and the complexity of evolving business models.
Banks face heightened scrutiny around BSA/AML compliance and consumer protection obligations, requiring strengthened controls, timely investigations, and adaptive compliance frameworks to address shifting regulatory expectations and operational risks.
Source: OCC Semiannual Risk Perspective Spring 2025
05. Cybersecurity
Operational risk remains high as cyber threats grow more sophisticated and banks’ reliance on third parties expands. This interconnected environment increases the risk of single points of failure, where a disruption or cyberattack on one provider could trigger sector-wide impacts. Threat actors continue to launch ransomware and double extortion attacks across banks of all sizes, while ATM “jackpotting” schemes are on the rise. These risks underscore the urgent need for strong operational resilience, regular testing of business continuity plans, and strengthened cybersecurity and physical security controls.
Source: OCC Semiannual Risk Perspective Spring 2025
06. Innovation & New Products
Banks are accelerating the adoption of innovative technologies, including AI and digital assets, to improve efficiency, enhance customer experience, and stay competitive.
Banks are cautiously exploring use cases for AI, from fraud detection to underwriting and compliance, while managing emerging risks around cybersecurity, model integrity, and regulatory compliance. Legacy systems remain a critical challenge, with outdated infrastructure threatening operational resilience and competitiveness. As banks pursue innovation, boards must ensure these activities align with strategic goals and are supported by strong oversight and risk management frameworks.
Source: OCC Semiannual Risk Perspective Spring 2025
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