OVERLAND PARK, Kan.-Too many credit unions focus on the rick and compliance pieces of enterprise risk management (ERM), and not on the opportunities the process can present.
In 2013, those CUs would be wise to recognize that and make changes, according to Tony Ferris, managing partner for Rochdale Group. Ferris told Credit Union Journal many people think of ERM only in terms of risk identification and regulatory compliance, and although it includes those features, he said the full scope of ERM "goes way beyond" those objectives.
"ERM provides the means for capitalizing on strategic opportunities by using in-depth knowledge of the credit union's risk profile to improve the overall decision-making capabilities of the credit union," he said. "At the same time, it provides directors and executives with the peace of mind that they understand the exposures that might jeopardize the attainment of objectives, won't be hit by surprises, and will not be subject to personal liability for unanticipated adverse results."
Ferris said Rochdale Group is optimistic that 2013 will be a successful year for credit unions, but warned the ongoing U.S. government fiscal deliberations "certainly add uncertainty" to the expectations.
How To Meet The Challenges
"Of course, the low-rate environment and increasing non-traditional competition will remain challenges, but credit unions that mitigate these issues using strong member service, well-developed risk-based lending and pricing capabilities, effective monitoring and collections practices, and aggressive marketing strategies, will achieve their member service and financial goals," he declared.
If lawmakers continue to not meet the fiscal challenges, Ferris warned 2013 and the next several years "could be a struggle" for many CUs.
"However, the ones that have used these last few years to enhance their risk-management processes and marketing strategies likely will have a much softer landing and continue to achieve positive returns despite the economic struggles," he predicted.