With fewer employees and closer relationships, smaller credit unions still have some advantages to managing risk.
Joette Colletts, regional manager of Credit Union Protection Risk Management at CUNA Mutual Group, shared that observation during a session at the company’s Online Discovery conference Tuesday.
“In fact, smaller credit unions have several advantages in managing risk. With fewer employees and close relationships, their culture readily promotes open communication and a willingness to share suggestions. This agile atmosphere lends itself well to reviewing, reevaluating and upgrading planning to promote a healthy risk culture,” Colletts said.
Still, credit unions must assume some risk to innovate and grow, she pointed out, adding that means having a culture that aligns risk with goals and properly managing the process to optimize return.
“Too little risk taking hinders innovation, which can threaten a credit union’s survival, while too much risk taking can be just as crippling by uncontrollably expending resources, leading to losses,” Colletts said.
Employee dishonesty and vendor fraud are among the challenges credit unions continue to face. Colletts said the common denominators she has seen in her 27-year career as a risk manager was the credit union either lacked the controls to help prevent the fraud from occurring in the first place, or became more relaxed about their controls over time.
“If you think you don’t need to implement controls or tighten existing controls, please think again. I assure you, you’re providing the ideal environment for a dishonest employee,” Colletts said.
Among the best practices Colletts suggested for thwarting employee fraud include implementing dual control for currency shipments and cash replenishments, controlling access to data, information, checks, and cash, maintaining an active supervisory committee, conducting surprise audits, and performing bondability verification and background checks.