WASHINGTON — It's a risky business – made riskier with NCUAoversight of the responsibility of directors in overseeing therisks faced by their credit unions.

That's the one sentence summary of a well-attended GAC breakout session where three panelists tackled the issue ofdirector responsibility in addressing the risks their credit unionsface. They included John Christenson, a CUNA Mutual associategeneral counsel; John Wallace, a CUNA Mutual vice president; andDavid Reed, a lawyer and founder of CUDoctor, a consultingpractice.

Kathy Thompson, a CUNA executive, moderated the Tuesdaysession.

Thompson set out one building block: “Just because you” –directors – “aren't paid does not release you from legalresponsibility.”

The other fact – agreed to by the panelists – is that risk is anecessity in credit union operation. It cannot beavoided.

But it can be managed, and that – stressed the panelists – isthe job of management. Not directors.

The director job is more subtle, amounting to setting outguidelines determining acceptable risks and regularly checking into ensure management is doing its job.

“The board needs to have an ongoing dialog with managementaround risk issues,” said Christenson.

Major categories of risk faced by credit unions, agreed thepanelists, are fraud, litigation (including class action suits),third party risks (arising from actions by everybody from a CUSO toa core provider), and emerging interest rate risks.

That is a lot of risk, and a board needs to know that NCUAexaminers closely assess the preparedness of this particular creditunion to deal with the risks it faces.

“Ask management to identify the key risks your credit unionfaces,” advised Wallace, “and also ask management to bring back tothe board information that will help the board understandmanagement's response.”

Bottom line: the board cannot duck risk and there is a lot ofit. Learning oversight of management is key to navigating thesechurning waters, said this panel.