ALEXANDRIA, Va.-Tim Segerson, deputy director of Examination andInsurance with NCUA, shared a Top 10 List of Red Flags that will be getting the attention of examiners, as well as another Top 10 List of Things Examiners Want to See.
10 Red Flags
1) Lack of commitment to risk management
2) Disengaged leadership
3) Concentrated control of power within the organization
4) Inconsistent or weak processes related to the size of the organization
5) Failure to adhere to policies and procedures
6) Appetite creep-going too far with a new program that has had good success
7) Silver bullets and shiny objects-seeking a single product solution to solve the organization's challenges
8) Disproportionate yields leading to unidentified risk
9) A state of denial-not fully understanding or acknowledging risk exposures
10) Misaligned incentives
10 Things Examiners Want To See
1) Commitment to making tough choices
2) Forward-looking strategy
3) Well-developed and integrated risk management
4) Balanced appetite for risk
5) Incentives aligned with sustainable risk levels
6) Continuous monitoring and strong comprehensive reporting regime
7) Strong control environment
8) Balanced portfolio and portfolio strategy
9) Equal weighting to downside and upside risk in the decision-making process
10) Optimal capital development
