Compliance Blog

Written by JiJi Bahhur, Director of Regulatory Compliance

Last Tuesday, the National Credit Union Administration (NCUA) released Letter to Credit Unions 13-CU-12 and a Supervisory Letter, clarifying its supervisory expectations for credit unions’ risk management processes.  The Supervisory Letter begins with a detailed overview of enterprise risk management (ERM) and then goes into NCUA’s risk management expectations for natural person credit unions. 

Although enterprise risk management (ERM) is not a regulatory requirement for natural person credit unions, the Supervisory Letter provides that the core ERM principles can be integrated into the overall infrastructure of credit unions of all sizes.  During the examination process, NCUA examiners will be ensuring that smaller, less complex natural person credit unions have a sufficient risk management framework in place to manage major risks within the credit union.  For larger, more complex natural person credit unions, examiners will ensure that a more comprehensive risk management program is employed. 

For further detail regarding the NCUA’s expectations with regard to natural person credit unions’ risk management programs, take a look at 13-CU-12 here and the Supervisory Letter here.  In all cases, no matter credit union size, examiners are expected to take a risk-based approach when evaluating a credit union’s risk management processes.  The Supervisory Letter covers what factors the examiner will consider when examining the credit union and explains the “total analysis process” it will employ when evaluating the credit union and measuring its risk.