Credit Union Exam Solutions Presents With Flying Colors ALCO GOVERNANCE ESSENTIALS: BUILDING AN EFFECTIVE COMMITTEE STRUCTURE
Jul 10, 2025
Todd Miller, a seasoned expert with 34 years at the NCUA, shares his insights on optimizing Asset and Liability Management Committees (ALCO) in credit unions. He discusses best practices for creating effective ALCO charters and fostering governance culture. The conversation highlights the crucial roles of committee members and the evolving function of chief risk officers. Miller emphasizes the importance of proper structure, responsibilities, and reporting practices in mitigating financial risks and aligning governance with organizational goals.
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Establish Clear Alco Committee Charter
- Create a specific ALCO committee charter instead of spreading responsibilities across multiple policies.
- Define the committee's purpose, membership, meeting frequency, responsibilities, authority, reporting requirements, and documentation clearly.
Board Members on ALCO Committees
- Board member participation in ALCO varies by size; smaller credit unions often include them, larger ones rely on staff due to time demands.
- Separating board ALCO and staff ALCO roles is a growing trend for efficient risk management.
Define ALCO Authority and Delegation
- Specify in the charter the committee's authority limits and whether it can delegate tasks.
- Include pricing, investment, and lending strategy changes within the charter to clarify roles and control.