Published in: CU Business
Financial professionals at times may have a “check the box” attitude toward risk management. Sometimes viewed as a necessary evil, risk management activities may have a perception of detracting from institutional profitability. While it is certainly possible to overregulate, proper risk management remains a timeless element to long-run profitability.
Particularly in relation to interest-rate risk, some credit unions have more tolerance than others, begging the question, “does assuming more interest-rate risk lead to higher returns?” While on the one hand, risk avoidance can certainly lead to falling short of profitability goals (the quote, “don’t manage your interest-rate risk using your members” comes to mind”), excessive interest-rate risk can also put a credit union into a squeeze should the market move unfavorably.