In the landscape of the financial services industry, credit unions serve as pillars of trust, stability and support for their members. Amidst the ever-evolving challenges and uncertainties credit unions face, risk professionals play a pivotal and critical role. While some functions may have the luxury of operating within their own silos to a certain degree, risk professionals need to be the Swiss Army knives of the credit union. They don’t have to be subject matter experts in everything, but they do need to understand all aspects of the credit union’s strategy and operations within a risk context.
The Swiss Army Knife Analogy
The Swiss Army knife is recognized for its adaptability and multi-functionality, incorporating a diverse array of tools within its compact design (small but mighty!). It is viewed as an indispensable tool that accomplishes real results.
Similarly, risk professionals within credit unions need to be equipped with a diverse skill set and have a holistic perspective to address a multitude of dynamic challenges and opportunities across the various functions of the credit union, as well as the complex risk landscape credit unions face.
Risk Mitigation and Management
At the core of their responsibilities, risk professionals act as proactive guardians against potential threats to the financial health of credit unions. Whether it be market changes, credit risks, operational vulnerabilities, or new strategic opportunities, they employ their diverse skills to identify, assess, monitor, and provide recommendations to mitigate, or to take advantage of, risks and opportunities effectively. By developing comprehensive risk management strategies, they ensure that the credit union navigates uncertainties with resilience and are prepared to exploit opportunities when presented.
Strategic Decision Support
Risk professionals are not merely reactive; they are proactive strategists contributing to the overall success of the credit union. By providing valuable insights into risk-return dynamics, they assist in shaping strategic decisions. They serve as a hub, bringing other functions together to play a role in a holistic risk management process. Their ability to balance risk and opportunity and interpret key risk information enables credit unions to pursue growth initiatives with confidence, fostering a cooperative culture of innovation and adaptability.
Crisis Management
In times of crisis, risk professionals emerge as indispensable assets. Whether faced with economic downturns, cybersecurity threats, or global pandemics, their preparedness and crisis management skills become paramount. Much like the Swiss Army knife’s emergency tools, risk professionals are equipped to handle unforeseen challenges and guide credit unions through turbulent times.
Member Trust and Reputation
The trust of members is the lifeblood of credit unions. That fact has never been more true than it is in today’s environment. Risk professionals play a crucial role in safeguarding that trust and giving confidence to all stakeholders by helping to ensure the financial soundness and strength of the institution. Their efforts contribute to maintaining a sterling reputation, reassuring members that their financial well-being is in capable hands.
Sharpening the Tool
The key to ensuring that this critical tool in the credit union’s arsenal remains sharp is a well-rounded continuing education program. Given the varied and dynamic nature of risk, that means remaining abreast of trends across the risk spectrum, but also maintaining an understanding of economic trends that influence credit, liquidity, and interest rate risk. This is an area that is often lacking in education offerings for risk professionals, yet during a recent risk roundtable discussion at which I presented on Liquidity and Interest Rate Risk, one of the professionals in attendance – representing a credit union with more than $15 billion in assets – stated that the external economic environment presents the greatest area of risk to her credit union today. It’s imperative that risk professionals understand these economic implications such that they can accurately prioritize and communicate all risks facing the credit union.
Conclusion
Within the toolkit of credit unions, risk professionals emerge as the Swiss Army knives – versatile, adaptable, and indispensable. Their multifaceted roles encompass risk intelligence, strategic decision support, crisis management, and the preservation of member trust. As the financial landscape continues to evolve, the importance of the diversity of their skills cannot be overstated.
The key to continuing to ensure those skills keep pace with the evolving, dynamic nature of the risks credit unions face is a robust and comprehensive continuing education program. Rochdale provides important elements of that program, from our ERM Certification School we conduct in partnership with America’s Credit Union (formerly CUNA), to the various industry events at which our professionals present, to the support we provide as part of our ERM offerings. We are here to help you keep your skills sharp to be able to tackle the job at hand.
For more information on how your credit union might benefit from a partnership with Rochdale, please contact us at sales@reimaginerisk.com.