Primary Risks

The supervisory committee’s responsibilities and effectiveness impact all risk areas in the credit union, but most significantly, compliance, transaction, and reputation risks. Credit, interest rate, strategic, and liquidity risk oversight primarily relates to ensuring proper administration of board approved plans, policies, and control procedures for operating the credit union.

Compliance Risk

A supervisory committee is responsible for ensuring a credit union’s annual audit, MAV, and Call Reports comply with applicable laws and regulations. For more information, see NCUA regulation § 715.3(c), Mandates.

NCUA regulation § 715.3(b), Specific [responsibilities], includes additional supervisory committee oversight responsibilities such as ensuring management addresses material findings and corrective actions in examinations and audits (internal or external). Failure to comply can expose the credit union to civil money penalties or administrative action.

Transaction Risk

A supervisory committee is responsible for mitigating the risk to earnings or net worth arising from error, conflict of interest, self-dealing, and fraud by periodically reviewing and testing the effectiveness of a credit union’s internal controls. Failure to manage transaction risk can result in poor publicity and loss of member confidence.

Reputation Risk

In addition to its responsibility for reviewing and testing internal controls, a supervisory committee is responsible for reviewing member complaints and overseeing the member complaint resolution process. Failure to do so can impact a credit union’s reputation among members and the public and expose the credit union to potential compliance risk.

Last updated on October 14, 2022.