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Protecting credit unions from internal fraud, handling reputation risk and maintaining member confidence headlined a few sessions Thursday at NAFCU's Annual Conference.

Christopher Pippett, partner with Fox Rothschild LLP, said theft of cash from vaults and teller drawers, manipulation of employees and family member accounts, abuse of expense accounts and loan approvals and disbursements are all sources and types of internal fraud that can occur at credit unions.

He explained various credit union board challenges that could lead to "serious problems and threaten the viability of the credit union," including boards made up of micromanagers, and those that are outdated, stale or distracted.

Attendees at Thursday's session on creating an effective complaint-tracking model. (Harrison McClary photo)

During another session, John DeLoach, president of Williams, Gautier, Gwynn, DeLoach & Sorenson P.A., said reputation risk for credit unions can stem from several external and internal factors, such as members, vendors, regulators, employees and management.

DeLoach explained NCUA's expectations regarding enterprise risk management plans for credit unions, noted in the agency's letters on e-commerce, indirect lending and website linking. He also provided guidelines for developing a reputation risk management program.

Mitch Klein, chief risk officer at Citadel Federal Credit Union, discussed how credit unions can create an effective complaint-tracking model to maintain member confidence. He said "complaint management is key," as is adequately addressing complaints, identifying potential problem areas and staying compliant. He suggested that for everyday complaints, the credit union review the complaint to see if specific notice or response requirements are needed and train managers and others to recognize complaints that may need extra attention.

"Most just require a good-will answer to make the member happy," he said.