The Federal Credit Union May-June 2015 - (Page 24)

Credit unions already assess their risk exposure based on CAMEL requirements and NCUA's seven risk factors: credit, interest rate, liquidity, transaction, compliance, strategic and reputation. ERM is the umbrella for coordinating these areas, providing a unified view of risk and improving the institution's ability to manage it effectively. "The goal is not to make it massively complex or overly burdensome," says Andy Vanderhoff, CEO of Seattle-based Quantivate. A NAFCU Services Preferred Partner for vendor and contract management, Quantivate provides governance, risk and compliance software solutions for credit unions. "If you're doing ERM right," Vanderhoff says, "you're not creating a brand-new set of risk controls or measurements; you're analyzing and measuring what you're already doing in a larger economic framework." 10 Tips From Those Who Have Done ERM S tarting the ERM process can seem daunting, especially if you are a smaller credit union. Here are tips from those who've been there: 1. 1 Walk before you run. "Appropriately set expectations," advises Andy Vanderhoff, CEO of Quantivate. "ERM is a journey that takes quite a few years. Take steps slowly and surely to get there." 2. 2 Don't shove it down people's throats. "ERM doesn't mean that you throw away everything that's already been done," says Vanderhoff. "Build on the effective risk culture that got you to this point. Don't dismiss it." 3. 3 Start at the top. "ERM may get assigned to a midlevel management person," says Jeff Owen of the Rochdale Group, "but it needs to start with the CEO and board. They should set the tone and embed the ERM culture across the institution." 4. 4 Give everyone a voice. "IT, business continuity, information security - these are functions that may feel like they don't have a very big voice in the organization," says Vanderhoff. "Make sure their voices get heard." 5. 5 Get the right people on board. "You want people on your committee who can be allies of ERM," Vanderhoff says. "Pick people who will help you create and support the ERM culture, not resist it." Essentially, ERM is a way of getting the organization to think about risk in new ways. Looking at risk in new ways Margie Johnson, vice president of regulatory affairs and enterprise risk management at the $760 million SAC Federal Credit Union in Omaha, says, "When I first looked at ERM four years ago, my thought was, 'Why do we need this?' What I didn't get then is how ERM interrelates with other departments. It's not just a single, siloed department working on something; we're sharing what we've identified with other areas of the credit union." Joan Moran, CEO of the $70 million Department of Labor Federal Credit Union in Washington, agrees. "ERM really makes you change how you think about your business. It's not just about conducting a quarterly risk review, it's about using ERM to analyze what's coming up, whether that's a core conversion or a merger." 6. 6 Leverage the work you've already done. "You don't need to reinvent the wheel," Vanderhoff says. "You may already have an internal audit function and a compliance department. Leverage and integrate those to drive the process." 7 7. Think through your data collection needs. "The last thing you want is another data silo," cautions Vanderhoff. "There should be a valid business driver behind the data you collect." 8. 8 Get the process down before you automate. "Process precedes automation," Vanderhoff states. "If you're looking for software, ask in-depth questions about what kind of process is included." 9. 9 It's not a one-time thing. "ERM isn't a once-a-quarter, once-a-year thing," notes Department of Labor Federal Credit Union CEO Joan Moran. "It's something that you should be doing all the time." Says Owen, "Combine ERM with ongoing strategic planning to give life to your program." 10. 10 Learn as you go. "Don't be afraid of the process," suggests Margie Johnson of SAC Federal Credit Union. "It's a work in progress, and we're always learning." Adds Vanderhoff, "With ERM, you want to enjoy the journey, not just the destination." - J.M. A good example, says Moran, is the federal government's shutdown in 2013, 24 THE FEDERAL CREDIT UNION MAY-JUNE 2015

Table of Contents for the Digital Edition of The Federal Credit Union May-June 2015

The Federal Credit Union May-June 2015