The uncertainty of the economy has changed the viewpoint of industries towards Risks, including Credit Unions. That time is gone when Credit Unions and financial institutions used to rely on forecasts and projections to manage their operations. In the present time, especially in 2020, forecasts and projections are not enough. The behavior of the members, internal & external factors, and influences create uncertainty in achieving the set objectives. Management has to start considering risk from all sources into consideration when pursuing strategic planning. Also, evaluation of adopted plans at regular intervals is the need of the hour to save your organization from many sorts of risks.

Leaders suggest that rigorous risk management programs help in mitigating risks, minimizing their impacts, help the management to cope with the risk in case it occurs. Knowing how to identify the risks and keeping plans in hand to deal with them before they negatively affect your operations is required. Acquiring information on risk and risk management offers many options to the management to run the business smoothly.

To help us understand and adopt a risk management program, Devon Lyon shared his work experience and thoughts at the 5th annual CULytics Summit. He is the Vice President at Research & Enterprise Management. At Direct Federal Credit Union. He assists in the strategic planning process to give insights to the management and also leads to getting arms around the risk management.

According to Devon, it is imperative to have a foundation of what matters to your organization. Knowledge of key matrices is important to make your enterprise risk management program work. The 7 risk factors that NCUA considers for managing risk are Compliance Risk, Credit Risk, Interest Risk, Liquidity Risk, Operational/ Transactional Risk, Strategic Risk, and Reputation Risk. Point to be noted here is – these risks don’t lie in a lane they overlap.

At Direct, Devon focuses on what matters, why it’s important, and why it happens. The motive is

• To ensure that there is no capital to Credit Union space
• To take proven risks and play with matrices to see what kind of potential capital hit we can take
• To know what happens if we bring new items in
• To ensure we take a risk without affecting the bottom line.

From these points, one can learn how to strategize and survive in the market.

There will be more discussion on risk and risk-related financial management. So, if you are starting from scratch, try to figure out what risks matter to your organization? What do you want to measure? What are you already measuring? There are possibilities that you already have matrices; they might have been built up over time. So, look at those and start breaking them down to get actionable data to feed your model or build your model. Feel free to approach vendors in the market for assistance and to lead the business in the right direction as ultimately we are here to serve our members, build a strong clientele, and never-ending relationships. So, be careful what you know and your organization from a risk management standpoint; find your table stack, evolve, and re-evaluate your risk management process.

To find more such panel discussions on Risk Management and from other Credit Union panelists, visit HERE