Understanding Risk Management: Culture, Appetite & Action

www.marktreichel.com

https://www.linkedin.com/in/mark-treichel/

Overview
In this episode, we break down the fundamentals of risk management for credit unions — what it really means, why it matters at every asset size, and how boards and executives can build a resilient framework that supports safe, sustainable growth. 

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What We Cover

• The Three Pillars of Risk Management
  • Risk Culture — how tone from the top determines effectiveness.
  • Risk Appetite — defining how much risk is acceptable before strategy becomes unsafe.
  • Risk Management System — the controls, processes, and oversight that put culture and appetite into action. 

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• Why Size Matters — and Doesn’t
  • Practical guidance for smaller credit unions: clear limits, strong oversight, and effective supervisory committees.
  • What larger credit unions need: formal risk appetite statements, risk departments, and comprehensive reporting frameworks. 

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• Common Pitfalls
  • The “capital trap”—why even strong net worth can’t compensate for unmanaged concentration risk (e.g., taxi medallion credit unions).
  • Siloed risk decisions.
  • Hoping limit breaches “self-correct.” 

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• Best Practices for a Strong Framework
  • Align appetite with capital and strategy.
  • Use clear metrics to monitor risk.
  • Establish formal limit-breach processes.
  • Encourage staff to raise risk concerns without hesitation.
  • Maintain strong documentation and communication. 

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Key Takeaway
Risk management isn’t about eliminating risk — it’s about managing it in a way that protects members while enabling growth. A clear culture, aligned risk appetite, and well-designed system create the foundation for long-term success.