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In the National Credit Union Administration’s (NCUA) “Key Examination Issues for 2008” webinar held January 29, NCUA Board member Gigi Hyland and NCUA senior staffers focused on two issues – the evaluation of third-party relationships and strategic planning.
Dominick Nigro, NCUA Information Systems Officer, discussed third-party relationships. He highlighted the importance of risk assessment and planning, effective due diligence reviews, and measuring, monitoring and controlling risks. Among many recommendations, Nigro encouraged attendees to consider vendors’ past experience and to analyze the vendor’s business plan and fully understand the vendor’s due diligence in managing their own third-party relationships. He further stressed that credit union due diligence will vary depending on the nature of the vendor relationship and the functions being performed by the vendor.
Debra Tobin, NCUA’s Economic Development Specialist Supervisor, discussed the importance of strategic planning – especially in light of NCUA’s recent (as of 12/31/2007) elimination of the CAMEL matrix. Tobin explained that NCUA is concerned about this because 17 percent of credit unions carry a high strategic risk rating. Eighty-eight percent of those credit unions are under $50 million in assets. Tobin explained that in 2008, NCUA examiners will look at credit unions ability to assess risks. She concluded her remarks with an explanation of an effective strategic planning model.
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