Six CUs Share Risk Officer

Lisa Hochgraf Photo
Senior Editor

3 minutes

In Canada, as in the United States, the regulatory burden on credit unions is increasing. 

“We are constantly inundated with new guidelines and regulatory requirements,” says CUES member Kelly Marshall, CCE, CEO of $220 million Summerland & District Credit Union, Summerland, British Columbia. A little while back, “a group of credit union CEOs recognized there was a growing amount of time spent on risk management rather than retail operations. We were losing our focus on what we were here primarily to do and that was to grow a successful member-focused business.”

So Marshall and leaders from other credit unions in British Columbia started talking about how they could get together to give compliance and risk management the proper attention while ensuring the sustainability of our business. After looking at various  providers, six credit unions from the province finalized  a memorandum of understanding and a master services agreement to jointly contract with PRA Group, an internal audit firm based in Surrey.

Under the arrangement, PRA Group employee Scott Betts works full time as director of risk services for the group of credit unions, which calls itself the Risk Management Alliance, or RMA. A former regulator, Betts is based in PRA Group’s Vancouver office and visits the credit unions at intervals. His duties include tracking the regulatory environment, knowing each of the six credit unions’ risk and regulatory situation in depth, helping each group member refine its best practices, and promoting best practices and policies to the larger group.

“Scott has his ear to the ground on expectations from each of the regulatory environments,” Marshall says. “He is keenly aware of risk management practices within each of the credit unions, and where each of our strengths and weaknesses are. He is building capacity within each of our organizations to align us. As best practices come out of that, CUs that need more help in certain areas will get that.” Rather than reinvent the wheel, group members will share and adopt each others’ successes in a process facilitated by Betts.

“It also drives continuity and consistency within the group of credit unions to enable opportunities for other collaborative initiatives,” Marshall adds.

RMA is governed by a “CEO group,” established by the six credit unions, which meets to discuss the alliance’s strategy and framework, direct the shared risk officer and oversee the “user group,” which was set up to manage the alliance’s day-to-day operations and implement these best practices back at their respective credit unions.

While the CUs aren’t required to have a risk officer, setting up this arrangement “gave us the opportunity to get out in front of the curve, instead of running risk management off the corner of our desks,” Marshall says. “Individually, we wouldn’t have been able to afford that kind of talent nor could we achieve individually what we can as a group.”

The six CUs involved are Summerland & District CU; $571 million Aldergrove Credit Union, Aldergrove; $464 million Community Credit Union, Surrey; $1.2 billion G&F Financial Group, Burnaby; $284 million Sharons Credit Union, Vancouver; and $412 million Sunshine Coast Credit Union, Gibsons.

“Aligning the expectations of partners in the agreement is an important ingredient to successful collaboration” Marshall says.

To start with, the group considers which credit unions make a good match for RMA.

“When we look at collaborative opportunities we start with common objectives and common interests” Marshall says. The group does a screening to make sure credit unions joining up are aligned. Two credit unions that were in the initial discussions did not join in the final agreement. Another two are in the final steps of becoming members.

“You need to build it and make sure that what is being done is effective for the core group,” Marshall says. “As the group matures, and the concept is proven we then focus on economies, the ability to add more credit unions and to grow that capacity” to collaborate on best practices.

“Scott isn’t managing our risk,” he adds. “He is providing the tools for us to effectively and efficiently manage our own risk.”

Lisa Hochgraf is a CUES senior editor.

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