"The world is full of RM advice! Some is good, some isn't worth the page it's written on! Unfortunately, the best advice is too often burried in technical manuals or behind some weight loss propaganda. It's our hope that this site will help you sort out what's relavent, what's applicable to your credit unions, and what might just work for you! At a minimum, we hope to help you focus your studies and benefit more from your RM research projects! Thanks for spending time at this site. Rich Woldt & Steve Finnigan your RM R&D assistants!

Equally exciting, Risk Managers can now specialize their research on risks of personal interest and than cross train Risk Managers in their chapter. For example, CUNA Mutual has Risk Managers specializing in tracking internet sexual predators to learn internet skills for tracking scam artists and those laundering money through their credit union. CUNA Mutual now is able to identify and monitor risk and exposure concentrations throughout the UK while we prepare credit unions in the UK to "branch bank" during and rebuild after the next disaster.

We've learned years ago that one has all the right answers. In fact no one has all the right questions to ask. Therefore, our R&D projects during 2007 will focus on developing RM specialists in each risk area and teams who'll cross train Risk Managers throughout the world credit union movement. I've asked Rich Woldt highlight R&D sites used by banks and credit unions in other CUNA Mutual markets. Please join me in welcoming Rich to our 2007 R& D project team for the UK.

Steve Finnigan - CUNA Mutual

Thank you Steve! I look forward to working with your team in the UK. Following is a step-by-step game plan I recommend UK Credit Union Risk Mangers follow when conducting RM research specific to the credit union movement. My assumption is some of your Risk Managers will be new to the movement and some will have come from outside the financial institution industry. Therefore, I begin with an introduction to Credit Union Risk Management so everyone has at least a basic understanding of how financial cooperatives manage risks and the roll CUNA Mutual continues to play in this process.      Rich Woldt

Step I:  An Introduction to Credit Union Risk Management

Financial cooperatives date back to the early 1600's or for that matter to before Christ (BC). Historically, financial cooperatives have always focused on creating economic opportunities for a defined "field of membership" and those within a "common bond." What we know as the "credit union movement" started when Germany's Friedrich Wilhelm Raiffeisen, (considered to be "The Founder of the Credit Union Movement") formed his first "Lending Society" in 1849 followed by his first truly cooperative credit society in Heddesdorf, Germany in 1869.

I refer to Raiffeisen as our "First Credit Union Risk Manager" because it was he who set out to manage consumer lending risks banks could not or would not manage. You see, banks of the day required a dollar of collateral for every dollar of credit, thereby depriving most of the poor any opportunity to loan money. Raiffeisen speculated that a financial cooperative could, if properly structured, mange lending risks based first on the character of the member, than on his or her  capacity to repay, and than if needed on collateral  Such collateral was, and often is today, offered by another member within the common bond. This RM strategy formed a foundation on which not only consumer loans could be approved but has carried over into current business and commercial lending programs. It's commonly referred to as "The Three C's of Lending."

The credit union movement spread to North America on December 1, 1900 when the first credit union was organized in Levis, Quebec, Canada, and on April 6, 1909 when the first credit union was chartered in Manchester, New Hampshire. From the beginning, credit unions have used their associations at the local (chapters), state (league), federal (CUNA Inc., ICUL, ABCUL, etc.) and international (WOCCU) levels to learn and share their RM experience, RM strategies, and RM methods. 

Credit union leaders such as Edward A. Filene, (considered the founder of the US credit union movement) owner of Filene's Store in Boston (Filene's catered to the lower middle class) and Roy F. Bergengren, a young lawyer working with the poor, organized chapters and leagues across the US culminating with the forming of The Credit Union National Extension Bureau in 1921 and subsequently the Credit Union National Association (CUNA Inc.) in 1934. Their mission statement written in 1921 focused on (1) enacting credit union laws, (2) organizing credit unions in each state as soon as the laws were passed, (3) bringing the number of credit unions to the point where they could sustain a state credit union league, and (4) establishing a national association of credit unions. Consequently, on August 10, 1934 the Credit Union National Association (CUNA Inc.) was founded at Estes Park, Colorado.

The evolution of credit union associations was similar in other countries. So, in 1970, credit unions got together and formed The World Council of Credit Unions (WOCCU). There is a consistent "people helping people" philosophy that's shared by financial cooperative. That's precisely why credit unions are positioned better than any other organization, anywhere in the world, anytime in history to manage risks that threaten a community or culture. I invite you to read my white paper on Maslow's Hierarchy of Needs and the Credit Union Movement. A link to my white papers can be found in the column on the right. I suggest you learn more about CUNA Inc. and Affiliates at: www.cuna.org and WOCCU at: www. www.woccu.org. Both sites will link you to respective members and affiliates. The headquarters of the world credit union movement is in Madison, Wisconsin.

Credit Union Risk Managers Learn by Association:

Credit Union Risk Managers have always used local associations (chapters) to customize RM training and focus on local RM concerns. They use state associations (leagues) to focus on regional RM concerns, federal associations to focus on national concerns, and WOCCU to leverage international RM resources. At all levels of the credit union movement, the focus is on identifying, measuring, and controlling the Pure or Speculative risks created by the international credit union movement. The primary mission of our Credit Union Risk Managers is to control any risk that threatens the economic well being of credit union members. I share this perspective, because as we move into 2007, credit unions will have to coordinate a concerted RM effort at every level of the credit union movement. As criminals use the internet to recruit and train their reinforcements, we too have to use the internet to protect and defend credit unions and their members around the world.

Credit unions learned to pool their risks! Most credit unions were too small to risk a large loan default and most members were too poor to grow savings for a rainy day. Therefore, in 1935, to manage the risk a large loan default would force a credit union into involuntary liquidation, and to encourage member' savings, US credit unions through their leagues and newly formed national trade association (CUNA Inc.) formed "CUNA Mutual Insurance Company,"a Life/Health insurance company focused on stabilizing the economic strength of the credit union's field of membership. Adopting the motto, "The debt shall die with the debtor" CUNA Mutual issued a blanket loan protection (LP) policy covering loans approved by the credit union's credit committee. To encourage savings, CUNA Mutual' issued a blanket life savings (LS) policy matching the member's savings at time of death. In 1960, when credit union laws required credit unions to carry a "fidelity bond" covering, at a minimum burglary, robbery, forgery, and embezzlement, and the US movement couldn't convince bank bonding companies to issue no-deductible blanket bonds, CUNA Mutual formed CUMIS, a credit union' specific property/casualty stock company owned by credit unions through their respective leagues. I suggest you go to www.cunamutual.com and study CUNA Mutual's web site to learn more about their company and affiliates.

"I share this historical perspective because it will help us focus our RM studies on those who depend on us to manage their risks. If we don't remember from where we've come, we'll not find it easy to know where we're headed."   Rich Woldt

STEP II: Learn to use the internet to research credit union risks:

Risk Management R&D gets easier and faster every time we log onto the internet! Government' regulators, industry trade associations, law enforcement/fire-fighter' associations, security companies, consultants, sponsor groups, and credit unions around the world provide not only insight on where credit unions are going, but the pitfalls they'll encounter along the way. The benefits of doing R&D via the internet are many but by far the most important appears to be our ability to learn from our "street-smart" credit union employees on the front lines. Couple this with an ability to warn the front-lines of impending danger, channel comfort during and aide after a crisis, and you'll quickly recognize the potential we now have to more effectively manage risks in the UK credit union movement via the internet.

As Steve noted, since 9-11-01, credit unions have been overwhelmed with good advice and RM recommendations. They've been especially inundated with well intended, but not always appropriate advice since Katrina wiped out many along the US gulf.   One lesson Katrina taught is to look first to your credit union associations and affiliates for industry specific RM advice. I've posted a white paper I wrote on credit union best practices during Katrina. There should be link to that paper in the column on the right. The best advice coming from professional Risk Managers in almost every industry is to rely heavily on industry regulators and trade association' Risk Managers. For credit unions that means turning to their industry regulators, their national, state, and local associations, and their bonding/insuring companies. In that most RM consultants read the same journals and study the same research, by using your credit union associations summaries, the odds are you're not only getting the same information but recommendations most appropriate for our industry. Life is too short to sit on good information. Each time you attend a conference, attempt to gain access for any online summaries, power point presentations and resource documents you can pass on to credit union leaders. For example, click here for a link to our pandemic risk research materials. The link is to.. http://www.chpra.wisc.edu/pandemic06.php 

Credit unions in every movement vary is size, member services, location, field-of-membership, etc. Therefore it's hard to find a one-size-fits-all recommendation. What we've also learned is fidelity bond risks (burglary, robbery, forgery, embezzlement, etc.) that once could be managed on a case-by-case or location-by-location basis, now need to be managed on a regional basis to avoid industry wide or catastrophic losses. The latest edition of CUNA Mutual's Unified Incident Command System uses zip and postal codes to identify and measure risks that threaten concentrated credit union exposures. In the future contingency plans, first-response, housing-in-place, and evacuation protocols will all be driven by zip/postal codes. Refer to chapter IV of your UK RM workbook for more information.

   Step III: Learn how to use credit union association and affiliate web sites:

Before benchmarking each year, I recommend you study the following:

Needless to say, your first stop when learning about the latest in Risk Management and the "tools of transfer should be to visit CUNA Mutual's web site and check out their on-line courses and RM resources. Just click on the CUNA Mutual logo's throughout this document and our R&D sites.

Check out the ABCUL search engine. I'm creating an excel spread sheet approach to monitoring our risk exposures and concentrations. It's driven by zip/postal codes, asset size, and could be by "field of membership." It would be great if we could use their same soft ware.  Let's discuss this!

Let's consider visiting the Association of British Credit Union League (ABCUL) site monthly to read risk specific articles. For example, click here (http://www.abcul.org/page/news.cfm) and read the articles on money laundering. Also use their "credit union search" feature to learn what's going on at our credit unions. For example, what member services are they offering that increase their risk of robbery, burglary, forgery, and fraud.

Katrina was a rude awakening for the US credit union movement. Since than there has been a major push to form branch banking networks in the US gulf before the next hurricane season.  Click here and become familiar with how credit unions plan to manage liquidity risks during the next mass housing-in-place or evacuation. Our RM goal is to develop a similar liquidity management plan where ever CUNA Mutual has an exposure concentration. 

Step IV: Learn to research "Fidelity Bond" risks:  

To more effectively manage CUNA Mutual' risks (burglary, robbery, embezzlement, etc.) that are concentrated for example in London, we need to take advantage of internet technology. There is a ton of UK risk specific information on the net. For example, look at this article that underscores why we're going to better track criminals in the UK in 2007. Click here or go to: http://www.informationweek.com/news/showArticle.jhtml?articleID=196513331  I recommend you learn how to use "Google" and other search engines. For example a google of credit union robberies in Birmingham England lead me to this international crime information site (Click here). I recommend you become familiar with doing on-line RM research of fidelity bond risks in the UK to include doing your electronic crime reverse tracking of zip codes, postal codes, area codes, and addresses. To begin learning how to use the the internet to conduct RM R&D... Click here and read the tutorials for using my R&D center. You can click on any of our or icons to enter either the R&D center or R&D library. You are also welcome to click on any or icons to read risk specific white papers. For example...

If you've not read the Introduction to RM above, I suggest you read my white paper on "Maslow's" hierarchy of needs because it underscores the benefits our RM programs bring to not only our credit union customers but their field of membership and chapters.

The primary RM mission of both the financial and insurance industries is to manage risks before and indemnify our customers after any insured loss. In my opinion CUNA Mutual has a distinct market advantage because it was born out of the credit union's movement and shares the "people helping people" philosophy, and being true to its charter, the "not for profit, not for charity, but for service" business ethic. It is precisely because of this market position that CUNA Mutual is poised to safeguard the international movement and bond them into an internationally supported public-to-private partnership with Credit Union' Risk Managers from around the world. 

We will be discussing all fidelity bond risks, electronic crime risks, associated P&C risks during our benchmarking week but also identifying new risks that should be pooled to better protect the UK credit union movement. For example, I think we could do much to stabilize the economic plight of victims during a mass evacuation. Knowing that extra expenses are a function of supply and demand, I see an RM strategy to not only spread risk over a tri-chapter area but from an RM perspective have pre-positioned recovery resources and pre-planned liquidity management tools and claims handling procedures. I recommend you study the insurance and bonding products currently available in the UK to identify partners for CUNA Mutual. Katrina, severely damaged not only the bottom line of world class insurance companies, but tarnished the image of our industry for years to come. Credit unions on the other hand captures a ton of new business from banks because many banks shut their doors and left town to protect stockholder' investments in our industry.

Before we move to an R&D exercise, I recommend you study a typical fidelity bond. Request a password to access  a copy of the fidelity bond used in the UK. 

Step V: Learn to think outside the box:

I've posted links you can use to begin your RM research of UK fidelity bond risks. I recommend you visit these sights regularly and use them to refresh your presentations and prepare for your CUNA Mutual group discussions of risks in the UK. I also recommend you research fidelity bond risks banks and in other industries. Learn to "think outside the credit union box! Click on any R&D icon to enter the . 

Step VI: Researching Fraud, Embezzlement, and Electronic Crime Risks:

Some industries call embezzlement and electronic crime risks "smoldering risks" because they tend to smolder while growing out of control. That's true in our industry as well. It's one reason why we emphasis that our bond is a contract of "good-faith" and their knowledge of a defalcation must be shared with CUNA Mutual as coverage stops the moment the credit union becomes aware of the loss.

Following are some additional R&D tips for researching international...Scam, Fraud, Embezzlement, Money Laundering, and a host of Electronic Crime Risks in the UK:

Plastic card losses have skyrocketed out of control over the years. There is new technologies being introduced daily. One of the latest is "pin and chip" technology. Google for web sites such as.. http://www.chipandpin.co.uk/consumer/ to learn more about the latest in plastic card' security features.

One of the better research sights I've found for researching international scams, identity theft, money laundering schemes, etc. is... www.fraudwatchinternational.com We will use this sight during our annual training. We'll us it to create a power point presentation you can use at RM group discussions during 2007. 

Use the samples of mail scams to practice both your "statement" analysis skills and practice doing "reverse" tracing of potential fraud indicators. To begin, click on "reverse tracing." or Google "reverse tracking."     For example you'll find.. http://phonenumbers.addresses.com/phone.php?refer=1723&aid=1723&sid=2&adword=RCPD|S|Reverse%20trace&gclid=CPrL6pCC64gCFSBTPgodGzV3pw  As an exercise, look for alternative sites to use specific to the UK. We're finding that 90% of the scams in the US are being routed through the Canadian telecommunication systems from Europe, Asia, and third world countries.

One of our efforts in 2007 will be to convince credit unions and their members that most of these scams are coming from a sweat shop telemarketing operation in some third world country. One operation will be running hundreds of variations of the same scam. .

Refer to the section in your RM manual that covers tracking indicators of fictitious and unauthorized loan from cancelled checks back through the records to the source of the embezzlement. This is the same RM strategy used to "reverse" trace scam, external fraud, and forgery indicators.

Electronic crime to include scams, extortion, fraudulent deposits, and bogus claims escalated during Katrina. I suggest you become familiar with www.fraudwatchinternational.com. We will be using this site to update our electronic crime fighting skills. I'll bring a power point presentation we can customize for the UK. Some other sites you might want to visit include:

There are a number of great RM resources in the UK. John Hamilton suggested we check out The Association of Irish Risk Management at http://www.airm.ie/  I encourage everyone to keep your eyes open for others we can use to focus our RM efforts. The more we look to local resources the better as they tend to be specific to risks in their country.

Credit unions and banks in the UK face growing threats. I found this of interest. Click here or use this direct link to.. http://business.scotsman.com/latest.cfm?id=1732352006

To really zero in on a location you can use map and earth link search engines such as at: http://earth.google.com/

Step VII: Recommended Internet R&D Sites and Conclusions:

I'm sure you've all reach the same conclusion. Once you start using the internet to research risks, the opportunities are unlimited. I recommend we all continue to explore the RM benefits of the internet and catalog sites we find particularly useful in the following catagories:

To monitor internet scams, frauds, and embezzlements go to: www.fraudwatchinternational.com and sites such as the Association of Certified Fraud Examiners at: http://www.acfe.com/home.asp and... 

To learn about burglary, robbery, and terrorist threats, go to sites such as: http://www.asisonline.org/ and https://swern.usp3.org/ and http://www.infragard.net/ and to enhance your public-to-private partnerships go to... https://mwern.usp3.org/ and...

Our internet' options to learn are unlimited! Our 2007 goals will include learning from each others, and hold periodic RM discussions with our fellow UK Credit Union Risk Managers at all levels of the international credit union movement!    

Thank you for inviting me to be part of your R&D team!        Rich Woldt