unraveling the myths & mysteries of erm and global … global credit risk... · unraveling the...

Unraveling the Myths & Mysteries of ERM and Global

Credit Risk ManagementJune 20, 2012

Presented by:

Robin D. Hoag, CPA, CGMA, CMCDirector, Financial Institutions Group

Enterprise Risk Management (ERM) Background Regulatory Environment

Components of ERM Suggestions for ERM Implementation Benefits of ERM Barriers to ERM Upcoming Changes to COSO’s Framework Myths/Mysteries Answered

Overview

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ERM BACKGROUND

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Major objective: identify factors causing fraudulent financial reporting and make recommendations to reduce incidences

Issued “Internal Control – Integrated Framework” report in 1994

Committee of Sponsoring Organizations (COSO)

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Joint initiative Institute of Internal Auditors (IIA) American Accounting Association (AAA) American Institute of Certified Public

Accountants (AICPA) Financial Executives International (FEI) Institute of Management Accountants (IMA)

Provides guidance on ERM, internal control and fraud deterrence


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1992 Establishes common definition of internal control Creates framework for evaluating the

effectiveness of internal control 2004: framework expands to create ERM;

sometimes referred as COSO II February 2009: releases “Guidance on

Monitoring Internal Control Systems” Provides assistance in setting up real-time

intelligence for consistency and change management (more proactive vs. reactive)


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October 2009: Recommends improved board risk oversight Issues new thought paper Indicates challenge during this

economic crisis January 2011

Issues two additional thought papers on ERM implementation


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December 2011: draft update on Internal Control Framework published Due to business and operating environments

dramatic change in 20 years Should enable more effective application in

practice Release postponed to 1Q 2013 (see

appendix for detail of expected changes)


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January/March 2012: Additional thought papers Enhancing board oversight Understanding and communicating risk

appetite


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As defined by COSO:A process, effected by an entity’s board of

directors, management and other personnel, applied in strategy setting and across the

enterprise, designed to identify potential events that may affect the entity, and manage risk to

be within its risk appetite, and to provide reasonable assurance regarding the

achievement of the entity’s objectives.

Definition of ERM

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Aligning risk appetite with organizational strategies

Enhancing rigor of risk-response decision

Reducing frequency and severity of operational surprises and losses

Elements of ERM

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Identifying and managing multiple and cross-enterprise risks (across silos)

Proactively seizing on opportunities presented along with threats

Improving effectiveness of capital deployment

Elements of ERM

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Board has overall responsibility for ensuring risks are managed

Management is responsible for ERM execution Identifying risks and managing them

ERM requires everyone in an organization to participate to ensure success

Key Players

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Currently no specific regulation exists requiring ERM; however: FFIEC Information Security Booklet indicates IS

risk assessments consider potential risk in all business lines and risk categories

GLBA [Section 501(b)] establishes requirement for financial institutions to safeguard privacy of customer financial information

Many references by Federal Reserve, FDIC, NCUA and state examiners in recent exams Focus on board’s fiduciary responsibilities for general

direction and control of the financial institution

Regulatory Environment

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2009: Securities and Exchange Commission Requirements for proxy disclosure on board’s

overall risk oversight 2010: Federal Financial Reform legislation

Mandates risk committees for boards of institutions and other entities overseen by the Federal Reserve

2010: Recent rule for corporate credit unions Requires establishment of risk management

committee


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January 2012: Supervisory focus Credit risk/Responsible lending Interest rate risk and liquidity Concentration risk

May 2012: Interest rate risk and policy requirements issued

Focus on compliance – Consumer Financial Protection Bureau (CFPB) Unfair and Deception Practices (UDAP) for overdraft

and lending


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ERM COMPONENTS

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Objectives focus on: Strategy Operations Reporting Compliance

Distinct but overlapping categories

COSO Cube

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As outlined in COSO’s 2004

“Enterprise Risk

Management –Integrated

Framework”

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Encompasses entity’s tone or risk culture Sets basis for how risk is viewed: top level

support Strong ERM leader/team

Knowledge: risks / industry / regulation Credibility / acceptance across organization Understands core strategies Good relationship with board / senior

management

Internal Environment

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Establish Risk Committee (suggestion) Representation from key departments Board liaison Assistance in acceptance and understanding Not always necessary

Internal Environment

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Must exist before management can identify potential events affecting its achievement

ERM ensures management has a process in place to set objectives

ERM ensures objectives are in line with entity’s mission and consistent with its risk appetite

Objective Setting

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Definitions: Risk Appetite: amount of risk on a broad level

an entity is willing to accept in pursuit of value Use of quantitative or qualitative terms

Risk Tolerance: range of acceptable variation

Objective Setting

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Internal and external events can affect achievement of objectives

Events must be identified and distinguished between risk and opportunities

Understanding of the difference between key performance indicators (KPI) and key risk indicators (KRI)

Event Identification

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KPI Performance metrics in place Department Overall entity

Almost exclusively on historical performance Untimely warning indicators

KRI Metrics that early on identify increasing risk

exposure Can be simple (key ratio) or elaborate model


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Objective: Manage loan portfolio losses to a minimum

KPI examples Charge-off ratio for June 30, 2012 Delinquency ratio for June 30, 2012

KRI examples Unemployment data Property value trends Financial concentration trends of commercial borrowers Financial trends of community employer Loan Officer experience levels concentration Combinations of items


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Opportunities/risks are channeled back to management's strategy or objective setting Linkage to core strategyAssists in identification of type of information

necessary to timely alert of emerging risk


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Risks should be analyzed considering likelihood and impact

Analysis should be basis for determining how risk should be managed

Risks should be analyzed on an inherent and residual basis

Linkage of top risks to core strategies

Risk Assessment

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Regulators have recommended utilization of a stress testing framework within ERM Forward lookingUltimate steps of cause and effect Traditional risk management usually focuses on

one step in the process

Risk Assessment

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Stress test exampleStep 1: Asset shrinkage will improve net worth

ratioStep 2: Decline likely will impact earningsStep 3: Asset decline could effect liquidityStep 4: Negative earnings and reduced liquidity

could impact net worth and CAMEL rating

Risk Assessment

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Management should determine how to respond to risk

Develop action plans to align risks with risk tolerances and appetite

Risk Response

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Establish and implement policies and procedures

Should help ensure risk responses are effectively carried out

Effective controls for managing critical risks

Control Activities

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Relevant information should be identified, captured, measured and communicated

Information & Communication

Should be in a form and timeframe enablingpeople to carry out their responsibilities

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Risks within acceptable limits, right level of information reported? Appropriate individuals

informed?

Entirety of ERM should be monitored and modified as necessary

Accomplished through ongoing management activities and separate evaluations

Use of “dashboard” reporting Visual displays with trigger points Consistency linkage to overall objectives Risks that should be stress tested – frequency

determined

Monitoring

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Risk is within the entity’s risk appetite Directors and management have reasonable

assurance they understand: Strategic objectives are being achieved Opportunities are being identified Reporting is reliable Applicable laws and regulations are complied

with

Effectiveness

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No material weaknesses in control Components don’t function the same for all

entities Potentially less formal in smaller

organizations Limitations Cannot have absolute assurance due to human

judgment (can be faulty) and controls (could be circumvented)

Effectiveness

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MACROECONOMIC CPI GDP HOUSING AFFORDABILITY CONSUMER CONFIDENCE RETAIL SALES TREASURY YIELD CURVE LOAN INTEREST RATES IN MARKET CUNA CU FORECAST

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UNEMPLOYMENT

EMPLOYMENT

LABOR FORCE

POPULATION

REAL DISPOSABLE INCOME

Labor Conditions

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EMPLOYMENT VS. UNEMPLOYMENT TRENDS/FORECAST

‹#›

Source: Realtor.org: U.S. Economic Outlook

-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

Q1, 2009 Q2, 2009 Q3, 2009 Q4, 2009 Q1, 2010 Q2, 2010 Q3, 2010 Q4, 2010 Q1, 2011 Q2, 2011

Nonfarm Payroll Employment Unemployment

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Source: U.S. Bureau of Labor Statistics; Google Public DataLast updated June 7, 2010M

Unemployment Rate by County - Example

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LABOR FORCE FORECAST

‹#›

152,000

154,000

156,000

158,000

160,000

162,000

164,000

166,000

168,000

2010 2011 2012 2013 2014 2015 2016 2017 2018

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POPULATION

‹#›Source: US BLS via Google Public Data

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REAL DISPOSABLE INCOME

‹#›

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

Q1, 2009 Q2, 2009 Q3, 2009 Q4, 2009 Q1, 2010 Q2, 2010 Q3, 2010 Q4, 2010 Q1, 2011 Q2, 2011

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EXISTING & NEW HOME SALES & PRICES

INVENTORY

SUPPLY

PENDING HOME SALES INDEX

HOUSING STARTS

AUTO SALES TRENDS

COMMERCIAL TRENDS

Supply & Demand

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HOME SALES & PRICES FORECAST

‹#›

-50.0%-40.0%-30.0%-20.0%-10.0%

0.0%10.0%20.0%30.0%40.0%50.0%60.0%

Q1,2009

Q2,2009

Q3,2009

Q4,2009

Q1,2010

Q2,2010

Q3,2010

Q4,2010

Q1,2011

Q2,2011

Existing Home Sales New Single-Family Sales

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

Q1,2009

Q2,2009

Q3,2009

Q4,2009

Q1,2010

Q2,2010

Q3,2010

Q4,2010

Q1,2011

Q2,2011

Existing Home Prices New Home Prices

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EXISTING HOME SALES & MONTHS INVENTORY FORECAST

‹#›

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0500,000

1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,000

Apr '09

May '09

Jun '09

Jul '09

Aug '09

Sept '09

Oct '09

Nov '09

Dec '09

Jan '10

Feb '10

Mar r '10

Apr p '10

Inventory Mos. Supply

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PENDING HOME SALES

‹#›

Source: Realtor.org

Pending Home SalesYear States Northeast Midwest South West States Northeast Midwest South West

Seasonally Adjusted Annual Rate Not Seasonally Adjusted2009 Aug 103.0 85.1 92.6 104.5 125.7 111.4 88.6 95.2 111.4 146.32009 Sept 107.8 83.1 95.8 108.3 138.9 102.7 72.4 94.2 99.0 140.92009 Oct 112.4 98.1 108.6 114.9 123.6 108.5 92.6 102.4 108.1 128.02009 Nov 97.0 77.4 84.8 98.5 122.8 78.1 52.9 65.7 78.8 109.82009 Dec 97.8 78.1 89.2 100.2 118.5 63.2 42.4 55.5 68.2 79.72010 Jan 90.2 71.3 80.4 98.0 102.9 74.3 52.5 64.1 77.5 96.82010 Feb 97.7 77.7 97.7 107.5 98.0 89.1 68.8 93.2 96.3 89.12010 Mar 104.6 75.6 100.1 124.6 100.4 120.3 99.1 116.5 139.9 110.12010 Apr 110.9 97.9 104.3 123.6 107.9 133.4 124.8 134.4 152.3 109.42010 May 77.7 67.0 70.8 82.7 85.3 89.0 87.0 81.2 93.9 91.32010 Jun 75.5 58.8 64.1 85.3 85.1 92.7 78.9 79.1 106.1 96.92010 Jul r 78.9 62.4 66.6 85.1 95.0 85.4 65.5 69.3 99.3 96.22010 Aug p 82.3 60.6 68.0 90.8 101.1 90.9 66.0 72.2 97.8 119.2

vs. last month: 4.3% -2.9% 2.1% 6.7% 6.4% 6.4% 0.8% 4.2% -1.5% 23.9%vs. last year: -20.1% -28.8% -26.5% -13.1% -19.6% -18.4% -25.5% -24.2% -12.2% -18.5%

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US NEW AUTOS SALES FORECAST

‹#›

17.4 17.1 16.8 16.6 16.9 16.9 16.5 16.1

13.1

10.3

11.8

13.814.6 14.9

15.4 15.6 15.9

$0

$5

$10

$15

$20

2000 2002 2004 2006 2008 2010 2012 2014 2016

Source: U.S. Dept. of Transportation and CUDLForecast

Mill

ions

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COMMERCIAL CLI

‹#›

Time CLI

% change from a quarter

ago

% change from a

year ago

2005.1 115.9 0.0% 2.7%

2005.2 116.8 0.8% 2.8%

2005.3 117.0 0.2% 2.4%

2005.4 118.3 1.1% 2.1%

2006.1 119.5 1.0% 3.1%

2006.2 119.4 -0.1% 2.3%

2006.3 119.5 0.0% 2.1%

2006.4 119.9 0.4% 1.4%

2007.1 120.1 0.2% 0.5%

2007.2 120.2 0.1% 0.7%

2007.3 119.6 -0.5% 0.1%

2007.4 119.6 0.0% -0.3%

2008.1 118.6 -0.8% -1.2%

2008.2 117.6 -0.9% -2.2%

2008.3 115.3 -2.0% -3.6%

2008.4 108.3 -6.0% -9.4%

2009.1 102.8 -5.1% -13.3%

2009.2 101.5 -1.3% -13.7%

2009.3 p 102.4 0.9% -11.1%

r = revision; p = preliminary

AL ASSOCIATION OF REALTORS®COMMERCIAL LEADING CLI is a commercial leading indicator index

designed to provide early signals of turning points – peaks and troughs – between expansions and slowdowns of commercial real estate activity.

Indicator ComponentsIndustrial production REIT Price Index NCREIF Total Return Personal Income minus Transfer Payments Jobs in Financial Activities Jobs in Professional Business Service

Jobs in Temporary Help Jobs in Retail Trade Jobs in Wholesale Trade Initial Claims for Unemployment Insurance Manufacturers’ Durable Goods Shipment Wholesale Merchant Sales Retail Sales and Food Service

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COMMERCIAL SALES VOLUME

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COMMERCIAL SALES PRICE

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COMMERCIAL RENT GROWTH

‹#›

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

2009 III 2009 IV 2010 I 2010 II 2010 III 2010 IV 2011 I

Office Industrial Retail Multi-Family

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COMMERCIAL VACANCY

‹#›

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2009 III 2009 IV 2010 I 2010 II 2010 III 2010 IV 2011 I


© DM 2012 53

COMMERCIAL INVENTORY

‹#›

14

14

14

14

14

14

14

14

15

15

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2009 III 2009 IV 2010 I 2010 II 2010 III 2010 IV 2011 I

Units

in

millions

Square

Feet


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RESCORING YOUR LOAN PORTFOLIO

Member Credit

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RESCORED PORTFOLIO: THE “SOFT” SCORE

‹#›

Total Loans

FICORate Term Remaining Age Score

10-Year Balloon 129,235 48,075,447 372 5.76% 120 94 26 748 46,885,026 877,724 223,046 89,651 10-Year Fixed 50,176 11,088,927 221 5.22% 120 80 40 740 11,031,117 57,809 15-Year Fixed 68,692 48,359,394 704 5.34% 180 126 54 766 47,934,737 338,501 86,156 20-Year Fixed 84,391 11,308,400 134 5.77% 240 183 57 744 10,941,809 297,575 69,015 3/1 ARM (FR) 131,507 2,235,623 17 6.73% 360 329 31 714 2,106,745 128,878 3/1 ARM (VR) 126,494 2,529,876 20 4.73% 360 307 53 689 2,114,719 138,316 276,841 30-Year Fixed 107,520 100,853,408 938 6.06% 360 309 51 732 95,822,455 4,208,438 184,667 637,848 5/1 ARM 106,778 960,999 9 5.95% 360 309 51 786 960,999 7-Year Balloon 157,524 6,931,035 44 5.11% 133 67 66 741 6,622,166 308,869 TOTALS 94,487 232,343,108 2,459 5.76% 249 202 46 743 224,419,774 6,169,423 620,693 - 1,133,218

230,589,196 1,753,912

Weighted Averages DelinquencyContractual

<30 ≥ 30 and <60 ≥ 60 and <90 ≥ 90 and <120 ≥120ValuationCategory

AverageBalance

CurrentBalance CountCategory

Rescoring your portfolio allows a current picture of the enhancement or degradation of member creditquality.

A combination of a drop 90 points or more in credit score (essentially two credit grades) and delinquency ofmore than 20 days provides an area of immediate focus for prioritizing which loans to address first.

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ERM IMPLEMENTATION

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1. Select the appropriate team2. Understand your institution3. Documentation and analysis of processes

and control techniques4. Identify and monitor key risk indicators(KRI)5. Test controls and report test results

Five Steps For Implementing A Successful ERM Strategy

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Leader - specific skill sets Possible representation of significant business

units include Lending Operations (branch/deposits) Finance Marketing IT Compliance/Audit

Start in increments and build on each accomplishment

1. Select the Appropriate Team

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Perform risk assessment to identify key processes, risks, and controls forOperationsCompliance Financial reporting

Identify key process owners

2. Understand Your Institution

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Inventory/build on existing systems in place Quantify severity/frequency/probability

Measure consistently

2. Understand Your Institution

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Interview process owners Consistent documentation of the process Identify risks and related controls Analyze risk management techniques and

take inventory Measurement of risks

Benchmarks Metrics Consistency/defined

3. Documentation & analysis of processes & control techniques

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Perform process and control reviews Identify control deficiencies Fill in gaps Remediate deficiencies Risk control strategies

3. Documentation & analysis of processes & control techniques

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Identify key controls to be monitored Identify KRI to be monitored Assign monitoring resources Train resources assigned to monitor key

controls

4. Identify & Monitor Key Controls

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Example Documentation Format

Risk Category

Description of Risk

LikelihoodImpact to Institution

VelocityInstitutionReadiness

Priority

Financial Risk

Significant losses due to exposure on lending and collection

Medium High (Direction:increasing, decreasing, stagnant)

(Put measurement)

High or rank


Example Documentation Format

Risk Category

Risk Owners(s)

RiskAppetite Metrics

Monitoring Action PlansCompany Oversight

Board Oversight

Financial VP of Lending

Loan and CollectionPolicy

Quarterly results communication of environment and actual statistics

Modificationof lending policy / collection techniques

President/CEO

InternalAudit

Full Board


Determine test procedures Develop test plans Link to internal audit Document tests and report results Ongoing communication with senior

management is essential Dashboard reports Challenge current strategy and tactics:

achieving objectives?

5. Test Controls & Report Results

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FINANCIAL SENSITIVITY ANALYSIS

APPROACH SCENARIO PLANNING

‹#›

Routinely perform portfolio-level scenario andsensitivity tests (with your ALM/IRRmanagement) to quantify the impact of changingeconomic conditions on asset quality, earningsand net worth.

An example could be for concentration in RealEstate loans would be the risk to earnings ifunemployment in the area doubled whilehousing market values declined by 20%.

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SCENARIO EXAMPLE: CONSIDERING THE DATA

‹#›

Category Risk Assessment Scale Output Category Risk Assessment Scale OutputCPI Low Risk 1 Delinquency Trends High Risk 3GDP Low Risk 1 Charge-Offs High Risk 3Housing Affordability Moderate Risk 2 Provision For Loan Loss High Risk 3Consumer Confidence Low Risk 1 Loan Growth Moderate Risk 2Retail Sales Moderate Risk 2 Loan Mix Low Risk 1Treasury Yield Curve Low Risk 1 Savings Growth Moderate Risk 2Loan Interest Rates Moderate Risk 2CUNA CU Forecast Moderate Risk 2

Cred

it

Rescoring Member Loans Moderate Risk 2

Unemployment High Risk 3Employment Moderate Risk 2Labor Force Low Risk 1 Concentrated member relationships Low Risk 1Population Low Risk 1 Type Low Risk 1Real Disposable Income Moderate Risk 2 Geographic Area Low Risk 1

Fixed vs. variable Low Risk 1Lien position Low Risk 1

Existing & New Home Sales Moderate Risk 2 Employer Low Risk 1Home Prices Moderate Risk 2 Seasoning of portfolio Low Risk 1Inventory Moderate Risk 2Supply In Months Moderate Risk 2Pending Home Sales Index Moderate Risk 2 Underlying Collateral Value Moderate Risk 2Housing Starts Moderate Risk 2 Current Loan-to-Value Moderate Risk 2Auto Sales Trends Moderate Risk 2Commercial CLI Moderate Risk 2Commercial Prices Moderate Risk 2Commerical Vacancy Moderate Risk 2 Risk Summary Total Average

Macro 12 1.50Labor 9 1.80

Risk Categorization Legend Risk Value Supply & Demand 20 2.00High Risk 3 Benchmarking 14 2.33Moderate Risk 2 Credit 2 2.00Low Risk 1 Concentration 7 1.00No Risk 0 Value 4 2.00

Systematic Risks Idiosyncratic RisksM

acro

Labo

rSu

pply

& D

eman

d

Benc

hmar

king

Conc

entr

atio

nVa

lue

© DM 2012 71

SCENARIO EXAMPLE: MODEL

‹#›

SCENARIO VARIABLE INPUTTroubled Portfolio Portion Based on Real Estate Loand 1.00% 1,690 aTroubled Portfolio Portion Based on Auto Loans 0.00% - bTroubled Portfolio Portion Based on Commerical Loans 5.00% 903 cTroubled Portfolio Portion Based on Other Consumer Loans 0.00% - dSales Price 80.00% 2,075 eGain/(Loss) on Sale (519) fMaintenance Fees on Loan Amount Based on Loan Amount 5.00% (130) gLegal Fees Fixed Dollar Amount (4,500) (4,500) hBroker Fees Based on Sales Price 6.00% (124) iTotal Gain/(Loss) (5,273)$ j

Current Adjustment AdjustedBALANCE SHEETASSETSCash e+g+h+i 6,398 (2,680) 3,719

Investments 90,310 90,310

Real Estate a 169,038 (1,690) 167,348 Auto Loans b 89,658 - 89,658 Commerical c 18,056 (903) 17,153 Other Consumer d 83,896 - 83,896 Gross Loans 360,647 (2,593) 358,054 Allowance -1.93% (6,973) 50 (6,923)

Net Loans 353,674 (2,543) 351,131

Other Assets 20,067 20,067

Total Assets 470,448 (5,223) 465,226

LIABILITIES & CAPITALNotes Payable 33,550 33,550 Other Liabilities 3,251 3,251

Deposits 395,292 395,292

Capital 38,356 (5,223) 33,133

Liabilities & Capital 470,448 (5,223) 465,226

Current Adjustment AdjustedINCOME STATEMENTLoan Income 24,297 24,297 Investment Income 1,459 1,459 Total Interest Income 25,755 25,755

Deposit Interest Expense 6,845 6,845 Borrowing Interst Expense 1,582 1,582 Total Interest Expense 8,427 8,427

Total Non-Interest Income 7,339 7,339

Total Non Interest Operating Expense 18,463 18,463

Provision for Loans Losses 2.03% 7,186 52 7,237

Non-Operating Gains/(Losses) j 2,295 (5,273) (2,977) Net Income 1,313 (5,324) (4,012)

Capital/Asset Ratio 8.15% 7.12%

© DM 2012 72

Helps entity manage risks to protect and enhance value by: Focusing on establishing sustainable

competitive advantageOptimizes cost of managing riskHelps management improve business

performanceHelps management to effectively deal with

uncertainty and associated risk and opportunity

Benefits of ERM

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As a result, institutions are more likely to: Identify and correct internal control problems

on a more timely basisProduce more accurate and reliable

information for use in decision-makingPrepare accurate and timely financial

statementsBe in position to provide periodic certifications

or assertions on the effectiveness of internal control

Benefits of ERM

© DM 2012 75

Industry observations: Lack of Board/Senior management support Lack of appropriate resources to champion the

project Not taking it slow Lack of a consistent definition of risk

measurement/approach

Barriers

© DM 2012 77

I need to implement ERM in its entirety at the start of the project.

No; it is more beneficial to start slow and focused (one or two business functions/units) in order to fine-tune the process and not get overwhelmed.

I need a department or Chief Risk Officer on staff to implement ERM.

No; organizations have been able to utilize current staff and committees, as long as they possess the appropriate skill sets as noted previously.

© DM 2012 79

I need to have a system model to implement ERM.No; Models could be useful; however, as long as risk measurement and documentation format is consistent and defined, it is not mandatory.

My current risk monitoring is appropriate and constitutes ERM.

These monitoring functions are essential and a good base; however, traditionally they haven’t been focused on the whole organization’s objectives and are not woven into the company’s culture/process/capital/objectives.

© DM 2012 80

Once a credit union implements ERM, it does not have to change.

No; ERM is constantly evolving and modifying to the current environment and strategies of the organization.

© DM 2012 81

Source for Additional Information

Committee for Sponsoring Organizations (www.coso.org) Guidance papers, surveys and articles on

ERM, internal control and fraud deterrence

© DM 2012 82

OFFICES: FLORIDA, TEXAS AND MICHIGAN

Robin D. Hoag, CPA, CGMA, CMCDirector, Financial Institutions Group

248-709-1270 [email protected]

www.doeren.com© DM 2012 84

Services ERM consulting Audit Internal audits Information technology assurance

Vulnerability assessments Penetration testing

Lending reviews Loan loss and delinquency control systems Regulatory compliance consulting Mergers & acquisition consulting Business valuation analysis

Financial Institutions Group

© DM 2012 85

unraveling the myths & mysteries of erm and global … global credit risk... · unraveling the...

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