The Office of Inspector General recommended adding an S category tothe NCUA'sCAMEL rating system to monitor interest rate risk, according toa Nov. 13 report.

The OIG conducted an audit of the NCUA's IRR policy to determineif its current policy and procedures reduce IRR. The OIG alsostudied what actions the agency has taken or plans to take in orderto identify and address credit unions with IRR concerns.

In the report, the OIG concluded the NCUA's CAMEL rating systemmay not be effectively capturing IRR when assigning a compositerating to a credit union. The report also stated that in the NCUA'sassessment of sensitivity to market risk under the L category ofits CAMEL rating may “understate or obscure instances of high IRRexposure in a credit union.”