Determining the Adequacy of the Contingency Funding Plans

Review a credit union’s CFP to determine if it is appropriate for the size, complexity, and risk profile of the credit union.

Prerequisites

An initial assessment of liquidity would be needed before completing this exam step.

People to Interview

• President/Manager

• Chief Financial Officer

Documents to Review

• CFP

• Liquidity stress tests

• List of contingent funding sources

• Engagement letters for contingent funding sources

• Proof of contingent funding sources tests

Questions to Consider

• Does the CFP contain the regulatory requirements for the credit union’s asset size?

• Does the CFP:

  • Identify a range of stress environments

  • Establish clear lines of responsibility and communication

  • Establish liquidity management process

  • Forecast and assess the adequacy of liquidity sources

  • Identify specific contingency sources

  • Specify frequency of testing and updates

• Are the stress environments appropriate for the credit union’s size, complexity, risk profile, product offering, and environment?

• Does the CFP require more intensive monitoring and reporting as the stress event intensifies?

• Do contingent funding sources appear adequate with consideration of stress test results?

• Have contingent funding sources been tested within the CFP’s required timeframes?

Intersections & Implications

A liquidity crisis can be detrimental to a credit union’s viability. If the CFP and contingent liquidity sources are not appropriate for the credit union’s operations, inform the EIC.

Last updated August 30, 2021