Credit union enterprise risk management programs to date largely have focused on operational internal controls, but proper ERM goes farther than that. Among other things, it also must consider a credit union's risk appetite. The importance of risk appetite has multiplied in light of several developments, such as the opening up of credit union charters to a greater variety of members and the scrutiny by examiners of how credit unions define their risk appetites. If a credit union has not defined its risk appetite, it has not identified the amount of risk it is willing and able to assume. Credit unions can follow a four-step road map to help incorporate risk appetite, tolerance and limits in their ERM structure.
The Risk Appetite Road Map
The following four steps can help credit unions define their risk appetites.
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