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Concentration Risk

Concerns

  • Lack of knowledge or poor management of concentration exposure (assets, liabilities, third-party providers, etc.)
  • Lack of policies related to identification, measurement and control of concentration risks
  • Over-reliance on single product or service
  • Significant loan losses, earnings deterioration and capital depletion
  • Regulatory pressure and compliance

Goals

  • Awareness of individual and aggregate concentration risk exposures
  • Understanding “event risk” related to each asset class
  • Defined predetermined actions when risk limits are reached

Results

  • Decreased regulatory scrutiny
  • Board policy and concentration risk limits
  • Monitoring and oversight guidance to ensure ongoing compliance
  • Assurance of well-thought out and documented responses to concentration risk events

Why Concentration Risk?

Many credit unions struggle with satisfying the requirements of NCUA’s Letter to Credit Union No. 10-CU-03 on Concentration Risk, and the related FFIEC Advisory on Interest Rate Risk Management memo. The Rochdale Group will deliver a comprehensive review and analysis and suggested changes to assist you in not only satisfying the regulator, but delivering portfolio clarity to drive organizational value and avoid excessive and unforeseen losses. Efforts to truly manage concentration risk must be assembled and managed broadly across the organization and entail activities including strategic planning, policy limitations, asset liability management capabilities, risk scenario analysis, ALLL methodologies, enterprise risk management processes, and portfolio analytics. A comprehensive plan that connects the dots can lead to advanced notice of possible problems and early refinement of lending and portfolio restructuring efforts. The Rochdale Group possesses the experience and skills to deliver excellent risk analysis and monitoring processes that your credit union can rely on going forward.

Why The Rochdale Group?

The Rochdale Group is a nationally recognized provider of services to the credit union movement, possessing significant technical and industry experience providing services to over 500 credit union entities. The Rochdale Group collaborates with credit unions to tailor solutions to its clients in today’s fast-changing and competitive environment.