Community Bank LeadershIP: Is Your Risk Appetite Keeping Pace?

The stance and priorities at the Federal Reserve are shifting, are your programs factoring those shifts in?

Earlier today, Federal Reserve Vice Chair for Supervision, Michelle W. Bowman, gave a speech on "Modernizing the Regulatory and Supervisory Landscape" at the 2026 Community Banking Research Conference, reinforcing the cultural shift outlined in the Feds Statement of Supervisory Operating Principles (SSOP) first published last year.

What does this mean for community bank leadership?

Potentially, greater opportunities for mergers and acquisitions, de novo formation, innovation, and growth—alongside efforts to reduce unnecessary regulatory and administrative burdens.

But perhaps the most important takeaway is the shift toward more tailored, risk-based supervision focused on material threats to safety and soundness.

As these supervisory and proposed regulatory changes take shape, community bank leaders have an opportunity to revisit their own approach to risk management.

Start with your Risk Appetite.

Does it accurately reflect your organizations willingness to take calculated risks? Does it distinguish material threats from risks you are comfortable accepting? Are your governance and risk management frameworks designed to support your strategy—or simply constrain it?

And most importantly, are you actually using it to make decisions?

Risk Appetite isn't meant to be just a brake. Used well, its also the gas pedal.