Webcast speakers outline ERM components

White (left) and Snyder confer before Wednesday’s webast on ERM.                                                          - NAFCU photo

Vital Insight President Alan White said operational and strategic risks, such as underestimating competition, were the main drivers that recently cost some Fortune 1000 companies more than 25 percent of their stockholder value in one month. Credit unions should also be wary of reputation risk, he said, as concerns about a financial institution’s solvency, whether valid or not, can result in loss of revenue.

Kurt Snyder, vice president and chief information officer of Affinity FCU, offered a case study. He said all employees at the credit union have some responsibility pertaining to ERM and emphasized that the credit union’s board is key to oversight of ERM programs. Credit union board members should be aware and concur with their institutions’ risk appetite, which he defined as the target risk level a credit union is willing to accept. He also suggested that credit union boards and management discuss, among other things, how much risk they are willing to take on and whether they are accepting enough risk to achieve the expected return.

Snyder also provided an example of an ERM dashboard that shows his credit union’s key risks and where the risk vulnerability lies (from low to high).

White suggested that credit unions, in building or maintaining their ERM programs, gather information about risks to the organization through executives and managers with facilitated interviews, group sessions or surveys. After defining the particular risks to their institutions, credit unions should then score those from unacceptable to acceptable and then prioritize them.

For small credit unions trying to manage risk with limited resources, Snyder suggests they turn to consulting firms, vendors and other credit unions for help and expertise.

This webcast will be archived for six months. For more, click on the link below.