The Colorado Credit Union Working Group – a group of seven credit unions in the state of Colorado – has produced two white papers to assist credit union colleagues in the areas of Enterprise Risk Management (ERM) and Allowance for Loan and Lease Losses (ALLL).
A successful Enterprise Risk Management (ERM) process can help credit unions meet many challenges and uncertainties head-on by providing a framework within which managers can explicitly consider how the organization’s risk exposures are changing, determine the amount of risk they are willing to accept, and ensure that they have the appropriate risk controls in place to limit risk to predefined tolerance levels. The Enterprise Risk Management White Paper was designed to educate and provide guidance to credit unions as they evaluate options and opportunities to develop their own ERM approach and build their own value.
Changing economic conditions require credit unions to understand and utilize all appropriate resources to manage loan portfolios, assist members, and accurately estimate and fund the Allowance for Loan and Lease Losses. The Allowance for Loan and Lease Losses White Paper focuses on best practices in ALLL funding, in accordance with the NCUA requirements and Generally Accepted Accounting Principles (GAAP). It examines the key elements of ALLL methodology, as well as important qualitative and environmental factors, internal controls and collection practices. It is designed to educate and provide guidance to credit unions as they look to adequately measure and account for losses in their loan portfolio — regardless of asset size.