WASHINGTON—Credit unions necessarily involve risk. That is inescapable, said the panelists at a well-attended breakout at CUNA's Governmental Affairs Conference.  The other, sharp side of that reality is that the NCUA has made it plain how the boards of directors oversee the risks faced by their credit unions will figure large in ratings.

"Risk is not a dirty word. It is essential," said panelist David Reed, a lawyer and founder of CUDoctor, a consulting practice. "If a credit union avoided all risk it would be out of business." But the risks, at all times, need to measured, monitored, understood. "The board needs to be the all-seeing eye at the top of the pyramid," added Reed,

Panelists, who also included CUNA Mutual Associate General Counsel John Christenson, CUNA Mutual Vice President of Credit Union Protection John Wallace and Kathy Thompson, a senior executive at CUNA, stressed that it is the board's job to oversee, not to attempt to manage, risks.  The latter is management's job and, while splitting that hair is not always easy, understanding the delicate differences between the board's duties and management's is crucial to a smoothly functioning credit union, said the panelists.