on research topics you find interesting and helpful. tech assistance / outreach through this biennial conference and several pfp conferences and outreach events each year, the federal reserve facilitates networking among mdi institutions. district coordinators from each federal reserve bank will serve on local exam teams during examinations, and collect feedback from mdis on how the pfp can provide additional assistance. district coordinators meet regularly with mdi management to discuss emerging issues and provide technical assistance, especially to those in troubled condition, to explain supervisory guidance, discuss challenges, and respond to management concerns and inquiries. high - interest items include the community reinvestment act, it and cybersecurity, concentrations in commercial real estate, interest - rate risk, capital planning and rules, anti - money - laundering compliance, and third - party vendor management. we want to help mdis navigate supervisory and regulatory requirements. to do that well, we want to continue to develop an open dialogue so we can better understand the challenges you face and how we can best help you wherever we have the ability to do so. personal contact and relationship building are important to community banking and, i believe, also to community bank oversight. we want, and need, to hear your questions and concerns. last april, we invited the leaders of all fed - supervised mdis to a leaders forum so we could spend a day and a half building relationships and talking about the needs of mdis. we also encourage staff to reach out to mdis and ensure that you are aware of our outreach meetings and research. let ’ s keep this communication going. we engage is these efforts because your institutions are vital to your communities and to the american economy. on behalf of the federal reserve, i ’ d like to once again thank you for the work you do in your communities and welcome you to this year ’ s conference. 2 / 2 bis central bankers'speeches

status of the underlying assets. we are incorporating these items into our supervisory monitoring screens, and we assume market analysts are also making use of these public data for their own analysis of banking risk. clearly, more can and should be done by banking organizations to demystify and clarify the risks they are taking. other areas being discussed include disclosures on the risk profile of bank credit portfolios by internal risk ratings. the first three elements of risk management that i have discussed are fundamental to bank safety and soundness, but without the fourth element - - internal controls - - none of the other elements can be effective. for that reason, an evaluation of internal controls has always been a fundamental part of bank supervision. it is a key to improving the odds that problems are found early and addressed before the bank insurance fund or taxpayer dollars are at risk. in response to a rising trend of unexpected weaknesses in control found at banks, supervisors are seeking to ensure that risk - focused supervision is striking the right balance between reviewing riskmanagement processes and performing procedures to validate whether the procedures are working as advertised. supervisors need to place more emphasis on determining whether the strength and effectiveness of those controls are tested by an independent third party other than supervisors and if they are, how frequently. in particular, as part of our risk - focused supervision, we have endeavored to use the work of internal auditors when it is deemed to be reliable. however, it is becoming clearer that we must bring a new level of skepticism to bear in this area for some institutions. in that regard, supervisors must return to the fundamentals of risk - focused supervision and require substantive verification procedures to confirm the effectiveness and reliability of internal audit, before placing substantial reliance on its findings. in the past, supervisors have taken some comfort in the fact that external accountants have also been looking at an institution's internal controls. as you know, for many banks the federal deposit insurance corporation improvement act ( fdicia ), section 112, requires that the external auditor attest to management's assertions regarding the adequacy of internal controls over financial reporting. recent events among certain banks that have had material financial consequences have caused us to question the usefulness of these attestations. in certain instances, we have been asking external accountants for their fdicia 112 work papers for banking organizations that we have found to have had significant control weaknesses. we are looking into that work to formulate some views on whether this area needs improvements and what actions