Risk Identification, Assessment, and Measurement

Determine the overall adequacy of the credit union’s risk identification, assessment, and measuring functions.

Prerequisites

  • Determine the risk governance framework

People to Interview

  • Leadership involved in policymaking

  • Head(s) of Risk Management and/or Internal Audit Departments, if applicable

  • Audit Committee Chairperson, if applicable

  • Supervisory Committee Chairperson, if applicable

  • Board of Directors, if warranted

Documents to Review

  • Risk management policies and procedures

  • Risk register

  • Risk assessment

  • Risk oversight committee minutes

  • Relevant MIS

  • Strategic Plan

Questions to Consider

  • Are the risk management practices sufficient to evaluate material risks across the enterprise and capture comprehensive risk on an ongoing basis?

  • Does the credit union maintain and catalog risks in a risk register? Does the register assign risk rankings? If so, is the risk ranking method applied reasonable and executable?

  • Is a process in place for determining materiality in the context of material risk identification for the purposes of strategic planning and policymaking?

  • Are the board of director risk appetite statements and/or risk tolerances consistent with strategic plans and the credit union’s financial condition?

  • Are the risk assessment and ranking practices aligned with the board of director's risk appetite and/or risk tolerances?

  • Are risk appetites and/or tolerances further distilled into usable risk limits? Is this information used to set limits in operational and financial management policies to manage risk?

  • Are the credit union's MIS capable of identifying, aggregating, and reporting on relevant and reliable drivers of risk for purposes of forming policies and strategies, and monitoring compliance with board-approved risk tolerances? Is data quality commensurate with the size and complexity of the credit union’s operations?

Last updated on August 23, 2022.