Separation of duties, especially in the loan process, is another important component of a successful risk management policy, which prevents one person from being able to put a loan in the system, she noted.

"Always have somebody else involved so they do not put a fraudulent loan on the book," Colletts advised.

CU Times asked Colletts if CUNA Mutual required credit unions to implement a fraud policy.

"It's not a requirement but I haven't had a credit union that chose not to implement it," Colletts responded. "Usually once you bring it to their attention, if it's not implemented, they really welcome the recommendation and understand the importance of it."

If a credit union chooses not to put an employee dishonesty policy in place, that information is forwarded to the underwriter, she said.

"The underwriter would generally take it up with the credit union as part of their coverage. I'm not really involved in that process," Colletts said.

Read more: NCUA board member questions fraud losses …

Under questioning from NCUA Board Member Mark McWatters Oct. 23 at the NCUA Board meeting, outgoing NCUA CFO Mary Ann Woodson said almost all of the NCUSIF's losses from 2014′s credit union failures were a result of internal fraud.

She told the NCUA board that $28.6 million or 94% of the $30.4 million in losses to the NCUSIF from the 12 credit union failures this year were related to fraud.

"A lesson learned for this agency: spend more time thinking about things like fraud as opposed to regulation," McWatters said.

"I take exception to that comment," NCUA Board Chairman Debbie Matz responded at the time of the board meeting.

Regulations are the best way to minimize the failure of credit unions, she offered.

"Safety and soundness and sound regulation go hand in hand, and I want to make sure that's on the record," Matz said.

NCUA Public Affairs Specialist John Fairbanks later told CU Times the estimated fraud losses for 2014 in credit unions that were liquidated totaled $26.9 million.

Estimated losses due to employee fraud at federally insured credit unions that were liquidated 10 years prior in 2004 totaled $7.5 million and $14.2 million five years later in 2009.

Fairbanks said the earlier $28.6 million figure described the estimated losses in all credit union failures, including assisted mergers through Sept. 30, 2014, where fraud was a factor. He said the agency does not have corresponding historical information for 2004 and 2009.

"Fraud loss estimates can change as the liquidation process proceeds, and there may be offsetting recoveries from asset sales. But the current estimated loss is that $26.9 million figure," Fairbanks said.

NCUA Board Member Rick Metsger said there is a great deal of variation in internal fraud losses each year, because a single credit union failure or lack thereof can cause annual figures to spike or decrease. He added that internal fraud is not a risk to the NCUSIF overall.

"This isn't a risk to the fund collapsing but there's a reputation risk for credit unions when members see this stuff is happening and that's important and as an insurer and credit unions pay for this insurance and so our fiduciary responsibility is to do everything we can to mitigate losses to that fund," he said. "There is no loss too small that shouldn't get our attention but it's not a risk to the solvency of the fund."

At the NCUA board meeting, Woodson said there was a reduction to the fund's reserves of $4.9 million, bringing the year to date total to $19.9 million for 2014. Total expenses were $29.4 million and net income was $24.6 million.

As of Sept. 30, investment income was $52.4 million and total income was $54 million.

The NCUA said it does not plan to assess an NCUSIF premium for 2014.

Metsger said the NCUA is taking steps to analyze, detect and deter internal fraud.

"We now have several staff that are certified fraud examiners, and we're training additional examiners for that certification," he said. "We're now moving to setting up fraud teams we can deploy when our examination suggests a closer look at a credit union might be warranted."

Colletts said CUNA Mutual has people positioned throughout the country who service credit unions on site by doing a risk management internal control analysis. The company also has recorded webinars on employee dishonesty and internal controls, as well as online tools, self-assessments, and risk review and internal control white papers.

"We do have a big stake in the game because that is a large loss area for CUNA Mutual Group, and we want to help the credit unions to prevent losses. Even if it's a non-insurable loss, those are areas where we still help our credit unions," Colletts said.