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(From the CU Times) – The NCUA’s board members approved the agency’s new Enterprise Risk Appetite Statement, a formal document outlining how the agency can align risks and opportunities when making decisions and allocating NCUA resources.
In the 3-0 vote, the board approved the 11-page document prepared by the agency’s Enterprise Risk Management Council. According to the NCUA, the statement is designed as a “management tool that provides guidance from agency leadership to managers and staff on the amount of risk the NCUA is willing to undertake in pursuit of its objectives.”
The Enterprise Risk Appetite Statement’s is focused on achieving several goals, including:
- Communicating guidelines about the levels of risk the NCUA is willing to accept in pursuit of its mission and goals.
- Promoting consistency in understanding, measuring and managing risk across the enterprise.
- Informing agency responses to risks and decision-making to balance limited time and resources.
- Driving a more risk-aware culture.
The NCUA will use the following definitions to articulate its risk appetite:
- Tolerant – the agency is willing to accept significant risks in pursuit of its strategic objectives.
- Moderate – the agency is willing to accept medium risks in pursuit of its strategic objectives.
- Averse – the agency is willing to accept little to no risk in pursuit of its strategic objectives.
“The enterprise risk appetite statement presented today is part of the NCUA’s overall management approach. And, I am especially pleased that we will have an averse risk appetite when addressing identified safety and soundness concerns at credit unions,” NCUA Chairman Todd Harper said. “This means we will be risk-focused and ready to act expeditiously if needed. I also appreciate that through this statement we will remain focused on ensuring compliance with and enforcement of federal consumer financial protection laws and regulations at credit unions.”