John Collins, CRO at Alloya Corporate FCU talks Enterprise Risk Management
Aug 11, 2022
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John Collins, CRO at Alloya Corporate FCU, discusses the evolution of ERM, the use of COSO model, managing interest rate risk with derivatives, aligning business opportunities with risk management, and practical advice for starting ERM programs.
Implementing COSO framework enhances ERM structure and consistency.
Categorizing risks into key areas ensures focused risk management approach.
Engaging in debates and aligning risks with strategic goals improves risk assessment.
Deep dives
John Collins' Experience in Credit Union Risk Management
John Collins, Senior Vice President and Chief Risk Officer at Aloya Corporate Federal Credit Union, shares his extensive 21-year career in credit unions. Starting as a teller, he climbed the ranks to CFO before transitioning to risk management. Collins highlights the importance of understanding and evolving ERM programs to adapt to changing regulations and risks.
Formalizing the ERM Program at Aloya
Aloya implemented an official ERM program ten years ago, focusing initially on existing risk management practices. Starting small, they formalized the program with version 1.0, utilizing frameworks like COSO to structure and evolve their risk management practices. Collins emphasizes the need for continuous program evolution to align with organizational changes and understanding of risks.
Implementation of COSO Framework at Aloya
Aloya chose to follow the COSO framework for risk management, providing structure and logical consistency to their ERM program. By aligning practices with COSO principles, they ensure coherence in risk management decisions and communication, both internally and externally. Collins highlights the importance of using frameworks to enhance program organization and consistency.
Risk Categorization and Organizational Structure at Aloya
Aloya categorizes risks into seven key areas, including interest rate, credit, liquidity, operations, strategic, compliance, and reputation risks. Their organizational structure aligns dedicated staff with each risk category, emphasizing the segregation of risk-taking and risk-assessment functions. This structured approach ensures a focused and coherent risk management process at Aloya.
Debating Risks and Value Creation in ERM Programs
John Collins underscores the significance of engaging in debates to understand, assess, and mitigate risks effectively within ERM programs. The emphasis is on evaluating risks aligning with the organization's strategic plan and ensuring risks are justified by potential value creation. By facilitating meaningful discussions and logical consistency, organizations can enhance risk management practices and decision-making processes.
John walks us through the start of ERM at Alloya Corporate Federal Credit Union. We then cover various topics such as COSO, Alloya's four main areas of risk, and the use of derivatives to manage interest rate risk.
The video version of ERM Perspectives, including this episode, can be viewed on YouTube: https://www.youtube.com/channel/UC8IQFOIwW4ejVc7CbhajPZw
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