Enterprise Risk Management is an important process credit union boards of directors must be aware of. Here is a simple overview of the process and how credit unions will be using this to balance their risk investments.

1. Enterprise Risk
Management
for Credit Unions:
An Overview
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2. What is ERM?
ERM is a process where
the board of directors and
management identify:
• Their risk tolerance, risk assessment
and risk response.
• Events that can impact the
organization’s risk (Internal and
External.)
• How to manage organizational risk.
• Strategies to accomplish objectives.
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3. What are the components of ERM?
• Strategic Initiatives
• Operations monitoring
• Reporting of critical measurements
• Compliance with regulations
• Perform risk assessments
• Communicate risk results
• Oversight and periodic review by management
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4. ERM
Encourages
a Portfolio
View of
Risk.
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5. ERM recommends considering risk
when setting all objectives.
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6. Risks should be assessed in three ways.
Likelihood
Impact
Response
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7. What Controls are in Place
to Contain Risk?
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8. ERM Communication
Management identifies, captures, and
communicates pertinent information
in a form and timeframe that enables
people to carry out their
responsibilities.
Communication occurs in a broader
sense, flowing down, across, and up
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9. ERM Internal Controls
A strong system of internal control
is essential to effective enterprise
risk management.
Financial controls and risk
management are to be expanded
to include all objectives of the
organization.
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10. ERM Internal Auditors
• Play an important role in monitoring ERM, but
do NOT have primary responsibility for its
implementation or maintenance.
• Assist management and the board or audit
committee in the process by:
- Monitoring - Evaluating
- Examining - Reporting
- Recommending improvements
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11. Management establishes an ERM by:
• Determine a risk philosophy
• Survey risk culture
• Consider organizational integrity
and ethical values
• Decide roles and responsibilities

12. ERM Risk model example:
• Environmental Risks
– Capital Availability
– Regulatory, Political, and Legal
– Financial Markets and Shareholder Relations
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13. ERM Risk model example:
• Process Risks
– Operations Risk
– Empowerment Risk
– Information Processing / Technology Risk
– Integrity Risk
– Financial Risk
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14. ERM Risk model example:
• Information for Decision Making
– Operational Risk
– Financial Risk
– Strategic Risk
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15. ERM Risk Responses
• Quantification of risk exposure
• Options available:
- Accept = monitor
- Avoid = eliminate
(get out of situation)
- Reduce = institute controls
- Share = partner with someone
(e.g. insurance)
• Residual risk (unmitigated risk – e.g. shrinkage)
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16. ERM Management of the Process
• Accountability for risks
• Ownership
• Updates
- Changesin business objectives
- Changes in systems
- Changes in processes
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17. Check out my videos
at BizWizTV.com
For more
information to help
your credit union
Contact me:
Russell@RussellWhite.com
or check out
www.RussellWhite.com
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