Risk, by definition, implies uncertainty. In today’s ever-changing regulatory environment, credit unions must develop and implement an effective enterprise-wide compliance risk management program to mitigate and manage their compliance risk. To be clear, risk management is not the elimination of risk, but rather the responsible balancing of risk versus reward. In order to effectively manage compliance risk, credit unions must conduct compliance risk assessments on their products, services, operations and the regulatory impact on such. You cannot mitigate risk if you do not know it exists.

A compliance risk assessment is used to identify risk to the credit union and its members (both consumer and commercial) by incorporating the inherent risks in a particular line of business, product or service and the quality of controls implemented by the institution to manage and mitigate those risks. An effective compliance risk assessment should include, at a minimum, risk identification, measurement, control, monitoring and reporting. During my 20 years in the industry, I’ve found there are five key components that contribute to the success of a compliance risk management program.

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