Organizations often prioritize risk management only during bad times, says Steve Houle, vice president, advisory service, for Catalyst Corporate Federal Credit Union.
“That’s the wrong way to manage,” says Houle, who addressed the 2019 CUNA Finance Council Conference Tuesday in New York City. “While credit unions are strong, we need to focus now on potential risks we’re facing. During bad times, we just react. Then it’s too late.”
Creating a “risk appetite statement” can help credit unions maintain a strong risk management focus, he says.
A risk appetite statement should explicitly note the level and nature of risk you’re willing and able to take to pursue your mission.
Houle says a risk appetite statement should address:
“Decide what level of risk you’re willing to take to support your strategy and include this in your asset/liability committee packet,” Houle says. “Keep in mind people, processes, and structure. If these aren’t aligned, that can cause problems.”
►Visit CUNA News for more conference coverage, and get live updates on Twitter via @CUNA_News, @cumagazine, and @CUNACouncils, and by using the #FinanceCouncil hashtag. Learn more about the CUNA Finance Council, a member-led professional society for credit union finance executives, at cunacouncils.org.