Assessment of a Banking Organization's Information Technology in a Risk-Focused Supervision Framework
June 16, 1998
Circular No. 11061

To the Chief Executive Officers of All State Member Banks,
Bank Holding Companies, Edge Corporations, and U.S. Branches
and Agencies of Foreign Banks, in the Second Federal Reserve District:

The Federal Reserve has long recognized that the use of information technology can greatly affect a banking organization's financial condition and operating performance. Accordingly, in implementing the risk-focused supervision framework, examiners must consider the risks associated with information technology in their overall evaluations of an organization's business activities and risk management processes. To assist examiners in assessing this important area, the Federal Reserve has developed additional guidance for the evaluation of the risks associated with information technology.

The supervisory letter outlines the Federal Reserve's new guidance, which provides a basic framework and common vocabulary to be used by examiners in evaluating an organization's ability to manage the risks associated with information technology. This guidance complements the current risk-focused frameworks for the supervision of community banks and large complex banking organizations.

Any questions you may have on this guidance should be directed, at this Bank, to Sarah Dahlgren, Vice President, or William Francis or Thomas Wines, Examining Officers, respectively.