not insulate them from global economic shocks or relieve them of the need for sound risk management practices, Comptroller of the Currency John D. Hawke Jr. warned Monday.

"While community banks face risks that are different in degree from larger institutions, they are in many ways little different in kind," Mr. Hawke said in the keynote address of a risk management conference sponsored by the Federal Financial Institutions Examination Council.

"You might not give a second thought to political turmoil in Indonesia or other distant lands because you think you have no business exposure there. But, directly or indirectly, your customers might well be exposed -- and if they suffer losses as a result, you might well suffer them too," he said.

All bankers should stay current in their knowledge of risk management practices and models, he urged, and should take advantage of improving technology as it becomes available. But they need to resist the temptation to see technology alone as sufficient protection against risk.

"It can never provide the whole answer, not for a $100 billion bank and not for you," he said.

"Community bankers seem to have fewer illusions on this score than some of their large bank counterparts," he continued. "What we see -- encouragingly -- is that community bankers are working hard to manage risk by educating their customers in better ways to manage theirs."

Agricultural lenders who help farmers hedge commodities price risk, and small banks that form partnerships among themselves to reduce risk concentration, he said, "exemplify risk management at its best."

"Some big city bankers could learn something from some of their smaller counterparts' innovative approach to managing risk," Mr. Hawke said.

Bank examiners have begun to look for a "sound risk management culture" in banks, but they recognize that this culture may be different from institution to institution. "Community banks ... may be able to implement these principles in a less formal, less structured manner than larger banks."

The most important element of such a culture, on which all others depend, is a companywide commitment to risk management practices. "Risk management cannot be reduced to a tool or technique or even a model; it's a philosophy -- a consciousness -- that must permeate every aspect of a bank's operations," he said.

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