By Lisa Hochgraf
Pretty much everyone agrees that had truly rock-solid risk management practices been in place in the financial services industry in recent times, our economy wouldn't be in its current questionable state. So, it's a great time to talk about how better enterprise risk management would look, Steve Williams told attendees at CUES Symposium: A CEO/Chairman Exchange yesterday in Kauai, Hawaii.
Principal with Cornerstone Advisors Inc., Scottsdale, Ariz. (a CUES partner and a CUES Supplier member), Williams offered a SWOT analysis of risk management today.
CUs' risk management Strengths, he said, include:
- strong capital levels,
- solid credit underwriting and asset/liability management and
- consumer friendly business practices.
Their Weaknesses in this area include:
- not having an ERM framework that integrates all risk efforts;
- not having sufficient analytics to truly practice intelligent risk management and
- not formally integrating risk management into strategic planning and pricing.
Opportunities for credit unions with regard to risk management could include:
- creating vibrant risk cultures for the ride up in a recovering economy;
- creating better risk dashboards and leading indicators for boards and management and
- collaborating to manage both cost and effectiveness (does every credit union really have to start a fraud department separate from that of every other credit union?).
And, finally, Threats might be:
- costly compliance efforts that don't result in better risk management,
- avoiding risk instead of managing it
- replacing credit risk with interest rate risk, which could bring on another crisis.
Williams said credit unions need to use a step-by-step methodology to manage risk through their enterprises. "We're starting to see software, frameworks," he noted, suggesting that credit unions need to take this really seriously. "You're not practicing risk management if you're not arguing" over your ideas and priorities.
Lisa Hochgraf is a CUES editor.
