Part 1: international background to the regulatory changes impacting Credit Unions in Ireland
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Part 1: international background to the regulatory changes impacting Credit Unions in Ireland

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Overview of the international context to the regulatory changes impacting Credit Unions in Ireland. Presentation outlines recent developments and potential lessons learned in the context of risk ...

Overview of the international context to the regulatory changes impacting Credit Unions in Ireland. Presentation outlines recent developments and potential lessons learned in the context of risk management practices.

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Part 1: international background to the regulatory changes impacting Credit Unions in Ireland Part 1: international background to the regulatory changes impacting Credit Unions in Ireland Presentation Transcript

  • Empowering Credit Unions Implementing effective risk management
  • • Earlier discussions touched on risk identification and categories • What risks do Irish Credit Unions face? • How did Baker Tilly arrive at 40 plus risks? PRISM, other sectors, international experiences • Little academic guidance/research in area. PRISM first foray by regulators International backdrop
  • • Where can international experience assist re risk management? • Three key sources of relevant information and experience: • US – National Credit Union Administration • Canada – Deposit Insurance Corporation of Ontario • Canada – Deloitte Canada Survey 2009 ‘The Upside of Risk’ International backdrop (cont.)
  • • Federal Financial Institutions Examination Council (FFIEC) identifies 7 risk categories which impact earnings/capital of Credit Unions: • Credit – risk re investments and loan provision • Interest rate – impact of changes • Liquidity – Credit Union unable to meet obligations • Transaction – fraud/error (impact on operations) • Compliance – violation/non-conformance with law etc. • Strategic – poor business decisions, poor execution • Reputational – negative public opinion The US experience
  • • Small Credit Union parameters revised. Relieves regulatory burden on 67% of Credit Unions (01/13) • FFIEC paper on supervision of technology providers (10/12) • NCUA advice: risk mitigation around cloud computing (07/12) • NCUA: increased emphasis in reviews on interest rate risk (05/12) • FFIEC: FAQs re interest risk management (01/12) Recent developments - US
  • • NCUA: relaxation of limits on business lending (10/11) • FFIEC: best practice re liquidity risk management (08/11) • NCUA: Expected investment due diligence across seven headings including collateral, interest rate etc. • Continuous flow post 2009 of closures, acquisitions, mergers and investigations Recent developments – US (cont.)
  • • DICO launched excellent and extensive thought leadership piece re Enterprise Risk Management (09/11) • 5 key risk categories outlined: • Strategic • Credit • Fraud • Operational (IT/non-IT) • Compliance The Canadian experience
  • • Deloitte Canada surveyed the management of 35 Credit Unions in Autumn 2009 • Found risk management was gaining importance as response to: • regulatory change • economic landscape • increased Board expectations The Canadian research
  • • Key risks reported: • Credit – concerns included: concentration risk, lack of broader information sources, forecasting capability • Fraud – debit card skimming growth, identity theft • Regulatory – obligations re transparent products, disclosure to members, onus on liquidity management • IT risk – system outages, technology delaying launch of services, data leaks (accidental and malicious) The Canadian research (cont.)
  • • The planned response by Credit Unions. • Four core initiatives: • Ensure adequate oversight by Board • Adopt appropriate technology and systems • Strengthen processes and policies to address fraud • Outsource back office activities and IT to mitigate risks The Canadian research (cont.)
  • • Will Irish Credit Unions face similar challenges? • To date, commission report, legislation and regulatory approach appear to be leaning on such international experiences. The future?