In the midst of the Great Recession, Doug Ferraro knew he and his team needed to re-evaluate how Bellco Credit Union managed the risks it faced.
“Significant external factors determined we needed to understand risks and develop a strategy to adapt and rebound to anything that was thrown our way,” says Ferraro, the president/CEO of the $4.3 billion asset credit union in Greenwood Village, Colo.
An early adopter of an enterprise risk management (ERM) framework, Bellco set out to identify all the risks it faced and determine its risk profile.
“While some credit unions came to ERM by default, we embraced it and have evolved with it,” Ferraro says.
That evolution resulted in Bellco eventually taking on an approach known as governance, risk management, and compliance (GRC). It’s a process that has been evolving since the beginning of credit unions.
Ever since the first credit unions were organized, credit union volunteers have looked for ways to meet members’ financial needs while simultaneously managing the risky business of doing so.
In early days, credit unions were largely run by volunteers without the benefit of technology or credit reports. As a result, a large company might have had multiple credit unions to allow the treasurer to keep up with record keeping and serving members.
A credit union with a closed common bond was largely protected from overwhelming accounting problems and excess losses. Today, fields of membership have broadened, technology facilitates operations, and volunteers are more likely to be “eyes on, fingers off” in exercising their responsibilities.
But with credit unions increasing in size and complexity, “there’s more pressure than ever on boards to understand what it is they are supposed to be doing and what they ought to be involved in,” says Randy Harrington, CEO of Extreme Arts & Sciences.
The board’s fiduciary duties of loyalty, care, and obedience, however, haven’t gone away.
Whether serving on the supervisory/audit committee or the board of directors, volunteers must be faithful and careful stewards of credit union assets while simultaneously ensuring the credit union pursues its mission of member service and creating value.
NEXT: Old problems, new methods