24 Nov Hidden Risks in Community Banking

Community banks play a vital role in their communities, and with that responsibility comes a wide range of risks. The trust that a bank has with their clients can quickly be tested when gaps exist in risk management.

A single oversight, whether in compliance, technology, internal communication, or property management, can create financial and reputational consequences. 

Some of the most common exposures include:

• ATM and premises liability
• Foreclosed and trust properties
• Leasing exposures
• Errors and omissions
• Fleet safety
• Employment practices liability
• Cybersecurity threats

These risks can impact everything from daily operations to long-term customer trust. When you clearly identify them, your leadership team can decide where to reduce, avoid, retain, or transfer risk before issues turn into claims or lawsuits. 

Key Insurance Coverages for Community Banks

A good risk strategy involves the right mix of insurance coverages. Community banks often require coverage such as: 

• Directors & Officers (D&O) Liability
• Errors & Omissions (E&O) / Professional Liability
• Cyber Liability
• Employment Practices Liability (EPLI)
• Fiduciary Liability
• Commercial Property Insurance
• Commercial Auto / Fleet Coverage
• General Liability
• Crime and Fraud Coverage
• Bond Coverage (Financial Institution Bond)
• Workers’ Compensation

Why a Risk Assessment Matters

Many community banks struggle with visibility. Leaders want to reduce risk, but often don’t know which risks to tend to first, how current controls compare to best practices, and where they may be lacking coverage. That’s where our free IQRM Risk Assessment for Community Banking comes into play. It delivers a score that outlines how effective your current controls are, along with a clear roadmap for improvement. 

A structured assessment helps an organization gauge the effectiveness of their current controls, culture, and communication practices. The assessment evaluates how well your organization: 

• Protects against cyber threats and responds to potential breaches
• Trains employees to recognize scams and phishing attempts
• Communicate goals, concerns, and strategic priorities
• Keeps advisors and board members informed
• Manages claims, litigation, and notification protocols
• Maintains safe, well-lit, and hazard-free branch and ATM locations
• Ensures clear procedures for employees using personal vehicles for bank business
• Supports a culture where employees feel comfortable reporting concerns

Each of these areas is a crucial piece of a strong risk posture and gaps in any one of them can have real financial and reputational impact. 

Take our free Intelligent Quotient for Risk Management assessment – a quick non-invasive tool that takes less than 5 minutes to complete. You’ll receive a free evaluation score that uncovers your hidden risks in community banking. 

TAKE ASSESSMENT NOW

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