I'm researching how to develop a basic country risk management program. I've read the OCC handbook on the subject, and think I can probably recognize one when I see it, but that doesn't really help you get started writing one.

Does anyone have any advice or suggestions for me? Thanks!

Good luck. I've been trying to figure out what to do on this one since March. I think small banks (such as I'm in) can incorporate this into their credit policy. Maybe an addendum to your current credit policy would suffice. I'm confused on this as well, and so far haven't been able to find out a whole lot.

And as you can see by the date on my post, I'd given up getting a response to this question. The bad part is that our regulator, while suggesting that we put a program together, is not much more help! They point us toward the booklet they issued, but that's all they're willing to do.

This is a new one on me. What is a Country Risk Management Program?

If you do a substantial amount of business with another country (we have a bank on the US/Mexico border), the regulators like to see a documented country risk program, showing the economics of doing business with citizens of this country, what factors increase/decrease the US bank's risk, what parameters you'll place on the relationships, etc.

Thanks, we do little business with citizens of foreign countries (we're a medium sized privately owned bank)and the ones we do do business with are usually students, this may be why I never heard of it. I was afraid it may have had something to do with the USA Patriots Act that I overlooked.

Sometimes I think that when the government wants a problem solved, they come up with a concept and then MANDATE to Banks that they must come up with policies and procedures to manage it.

At least... that's how I remember the beginnings of CRA......

Several years ago, I worked for a bank that approved lines of credit to foreign banks, specifically those in Central and South America.

When the Fed came in and performed their annual safety and soundness exam, one of their comments was that the bank needed to perform country risk analyses, since it had potential exposure in foreign countries.

We asked how to get these analyses and they said the Fed has them. However, when we called to request a copy of these reports, the individual said they could not release that information directly to the banks!!

The bank finally prepared a country risk exposure analysis on its own, using the Latin America Monitor (I think that's the name.) as a basis. The analysis included the political and economical background of the country and the stability of its government. In short, it was a determination by the bank of whether the loan would be repaid, based upon the existing climate in a particular country. The bank would then approve a limit on the dollar amount of loans that would be permitted to that country. This limit would be monitored and increases in the country limits would be approved by the Credit Committee/BOD.

Sorry, I can't recall anymore specific information, but unless your loan exposure is laden with foreign businesses, financial institutions and politicos, the Fed's request to perform a country risk management analysis seems a bit overboard.

This is only my humble opinion. I'm not an attorney giving you legal advice or any of that other stuff.