The examination approach focuses on seven operating risk factors. The seven risk areas we concentrate on are:

• Credit Risk – the risk of non-repayment where the credit union invests or loans funds.
• Interest Rate Risk – the risk that changes in market rates will not be adequately managed to maintain an appropriate net interest margin.
• Liquidity Risk – the risk the credit union will not be able to liquidate assets quickly and with minimal loss in value to meet its obligations.
• Transaction Risk – the risk that fraud or errors will cause a loss to your credit union. This risk is a function of internal controls, information systems, employee integrity, and operating processes.
• Compliance Risk – the risk that failure to comply with laws and regulations, prudent ethical standards, and contractual obligations will harm the credit union.
• Strategic Risk – the risk poor business decisions or improper implementation of strategic goals will reduce the credit union’s earnings and net worth.
• Reputation Risk – the risk the credit union’s public image will be tarnished due to improper actions on the part of officials, management, or staff.

We focus our examination on only those risk areas determined to pose the greatest risk to the credit union.