Creativity and Risk Management: A Partnership for 2009

Are you prepared for 2009? Learn how to take advantage of any opportunities while preparing sound risk management strategies.


Despite today’s unpredictable economy, opportunities still exist for credit unions to grow existing accounts while increasing profits.  In fact, the current economic climate may allow credit unions to increase current member loyalty, expand membership and serve more of their community or Select Employee Group (SEG).

To take advantage of the opportunities in the market, credit unions must uncover additional niches in their community and membership base that are currently not being served or could be served better.

To start, credit unions should host creativity sessions with staff that challenge current processes in order to change how they look at their respective membership and community.  By re-thinking relationships with the current and potential member base, the ensuing fresh outlook may help credit unions uncover areas of potential expansion.

Some of these areas include:

  1. Unbanked/Underbanked/Underserved:  What does this group look like in your market?  This could be the student population that has unique needs.  This could be the growing immigrant population that is unfamiliar with traditional financial institutions.  This could be young workers that are starting off in their chosen profession.  Any way you look at these consumers, they may be a niche for your institution to serve and educate.  Be creative in your approach.  Differentiate yourself from the competition and you will gain a member for life.
  2. Unique lending opportunities: What are some of the “non-traditional” needs of your market?  Do you have members that are looking to finance elective surgeries, funerals or other ‘big ticket’ bills?  These consumers may not understand the far-reaching capabilities of personal loans.  However, if these loans were marketed in a fresh and different way, consumers may feel a more direct correlation and then access the finances they need.
  3. Look at your new account opening process.  Take a creative approach to this process in all of its channels.  Whether prospective members are coming in to a branch, visiting a website or reaching a call center, many credit unions have traditionally relied on archaic processes at this vitally important first member encounter.  Make sure this process includes the right steps for compliance, good data elements and the opportunity to maximize relationships with prospective members.

Additional ideas can be generated in a creativity session that leverages your understanding of your credit union, the community you serve and your current membership base.  Now that we have worn our creative hats, let’s make sure we complement these opportunities with sound risk management strategies for the short- and long-term growth of the expanded market.

To prepare sound risk management strategies, you should consider the following:

  1. Are your pricing strategies and tiers in line with what you are trying to accomplish?  Be diligent and use the correct scoring model for specific portfolios, making sure your pricing tiers fit the culture and objectives of your organization.
  2. Monitor your portfolio. This is an important tenant for any risk management strategy.  Monitoring score fluctuations, both positive and negative, will help you track ongoing portfolio performance.
  3. Understand the market around you. Having access to additional market data can assist in managing your portfolio and forecasting changes.  Understanding the trends in your portfolio and your market can lead to better planning.

As with any risk management strategy, balance is important.  When looking at implementing new ideas and strategies, credit unions may be best served by sticking one foot in to “test the waters” and then gradually increase and grow the opportunity.  Jumping in with both feet may not always provide soundness and balance in your portfolios.  This balanced approach allows your members to trust and feel the consistent performance of their chosen financial institution.  Partner creativity with risk management for a successful 2009.

Linda Moynihan Vance is vice president of credit unions in the financial services group at Chicago-based TransUnion.  She can be reached at .



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Dec. 1, 2008



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