ALEXANDRIA, Va.-NCUA issued a Letter to Federal Credit Unions (02-FCU-09) last week explaining the procedures and benefits of the risk-focused examination program, which examiners are going to begin training for in August. Included with the letter is a listing of risk indicators that examiners will use at the credit unions. The letter, signed by NCUA Chairman Dennis Dollar, touts the program as spending less time on on-site examination, emphasizing improved communication, increasing focus on areas of risk, allowing directors meetings with examiners to be optional for qualifying credit unions, customizing examination reports, and emphasizing supervision where appropriate. "Throughout this letter, you will notice the repeated use of the word `risk,' " the chairman wrote. " Risk is not necessarily a negative term. In the financial world, it is a necessity. NCUA does not seek to eliminate risk in credit unions; rather, we want to ensure risks are managed at appropriate levels, given the structure and net worth of the institution." The letter also explains the different types of risk, including credit risk, interest rate risk, liquidity risk, transaction risk, compliance risk, strategic risk, and reputation risk, each of which will be labeled `high,' `moderate,' or `low.' "We believe you will find increased value in this new exam program, and we welcome your feedback as you have the opportunity to experience this more risk-focused examination approach and as we continue to improve the program as it evolves into an even more effective approach for both NCUA and the credit unions we regulate and insure," Dollar concluded.