You can be risk averse and risk-aware, but too many credit unions are just risk averse. They assume they take on very little risk, so they don't need to worry about risk management. But if you're not risk aware, how do you know that you are avoiding risk?

Risk management isn't just about managing obvious risks. It's about understanding your credit union's total risk exposure and risk appetite and ensuring that they are aligned. If your credit union doesn't have a risk management program, it doesn't mean it's not facing risks—it means there are risks that aren't being managed.

Here are four examples of how a credit union that believes it's risk-averse may unknowingly expose itself to risk.

1. Neglecting critical vendor due diligence and monitoring

You did your due diligence before beginning a critical vendor relationship, but what have you done since then? A good risk management program has effective vendor management that includes ongoing due diligence and vendor monitoring to identify and mitigate any potential new or increased risk in your critical third-party relationships.

If you're not actively assessing and monitoring your third-party vendors, you don't know if your risk exposure has changed.

2. Manual regulatory change management

No matter how smart your credit union's compliance officer is, tracking regulatory change is an overwhelming task. It's not just about smarts – it's having enough time to identify the changes, craft an implementation plan, and then see it through. Writing policies and procedures, training staff, and assessing control effectiveness all take time.

Compliance officers need time to assess compliance risk to understand which areas pose the greatest risk. If you're not assessing compliance risk while proactively managing regulatory change, you risk lawsuits, enforcement actions, regulatory fines, and reputational harm.

Automating regulatory change management gives compliance officer more time and greater visibility into compliance activities so they can better manage risk.

3. Stale business continuity plans

How often does your credit union update its business continuity plan (BCP)? I'm not talking about reviewing the whole document (though that's important). I'm talking about those seemingly small updates when a person steps into a new role or a new critical vendor is onboarded. There're also bigger changes such as introducing a new business line.

If you're not making those small adjustments or assessing the impact and criticality of new vendors or business lines as you introduce them, your plan is out of date – exposing your credit union to unknown amounts of risk if there's a business disruption.

4. Postponing IT updates and maintenance

Everyone is looking to save money, but putting off IT and cybersecurity maintenance and updates can cost you a lot more in the long run.

The Reserve Bank of New Zealand (RBNZ) relied on a 20-year-old Accellion product for its secure third-party communication. The product was scheduled for sunset. Before RBNZ switched products, it was breached in a cyberattack, exposing RBNZ's data.

Your credit union doesn't need cutting-edge technology, but it needs to make sure that third-party vendor products and services remain secure and reliable. These assessments are part of any good vendor management program. They help identify risks.

The risk of complacency

Overconfidence in your credit union's risk posture leads to complacency. When you assume you're engaging in low-risk activities, you're not looking for changes in the risk environment. Risk can creep up on you without you knowing, endangering your credit union's ability to serve its members.

Don't make the mistake of assuming that risk aversion is risk management. You can't limit exposure to risk if you don't know it exists. The only way to be certain you're avoiding risk is to actively manage risk.