TCT Risk Solutions Offers Credit Unions Tools for Managing Interest Rate Risk


Interest rate risk is a real-world issue for credit unions and one that needs to be managed closely. Strategic Link partner, TCT Risk Solutions, understands that credit unions face more than one type of interest rate risk (IRR).

With that in mind, TCT Risk Solutions is hosting a webinar to help risk managers understand and stay within National Credit Union Association (NCUA) compliance.  

“Interest Rate Risk is important for all levels of credit union management to understand, as well as anyone involved in lending,” said John Trull, Northwest Credit Union Association Vice President of Regulatory Advocacy. “In a quickly rising interest rate environment, a balance sheet with a concentration in long-term assets can lead to the interest rates you are paying for in deposits to exceed interest earned on the money loaned. In extreme cases this can result in losses and a rapid decline in net worth and it is the reason it is so important to stress-test your balance sheet.”

Following deregulation in the early to mid-1980s, credit union balance sheets have become more complex and susceptible to the unpredictability of interest rate risk. Regulators continue to emphasize measurement and management of interest rate risk, both in focused regulatory changes and in the day-to-day practices of examination staff.

Industry leaders and regulators agree that many credit unions do not “maximize” their balance sheets to gain maximum returns. Experts in enterprise risk management state that credit union management must employ tactics and tools that will assess, exploit, and control risk for the credit union’s benefit. 

Senior staff members at NCUA encourage credit unions to expand their IRR management by utilizing both earnings at risk (EAR) and net economic value (NEV) analysis. This guidance can be found in the NCUA Examiners Guide—and, specifically, pages 39-40 provide more details on EAR and NEV.

A credit union’s Asset/Liability Management (ALM) process represents one of the most important functions in its operations. Paramount to any credit union’s ALM process is the IRR equity-at-risk and minimum equity limits recommended by its ALM Committee and established by its Board of Directors.

In order to help credit union risk managers better understand NCUA guidelines, TCT Risk Solutions is offering an important webinar—ALM Bootcamp on July 17 at 11 a.m. PST. This webinar will offer tools and tactics, following the directions found in NCUA guidance that credit union risk managers can employ to achieve the necessary outcomes.

“We are pleased to offer credit unions these resources through our Strategic Link business partner, TCT Risk Solutions,” said Jason Smith, NWCUA Vice President of Strategic Resources. “Our NWCUA credit union members will get some tangible ideas on how they can manage Interest Rate Risk, as well as valuable hands-on experience.”

The webinar will include:

  • Regulatory requirements
  • Multiple methodologies
  • Setting credit union-specific limits
  • Using online simulations to model balance sheet changes

NWCUA member credit unions will receive a 15 percent discount on this webinar. Please use the discount code NWCUA15. Register for the webinar online. To learn more about TCT Risk Solutions, visit it online.

Posted in Business Solutions, GoWest Solutions.