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Strike a Strategic Balance between Human Expectations and Operational Tactics

BY MARVIN C. UMHOLTZ

Are your strategic and operational plans meeting the unique needs of your CU’s future? Overcoming today’s strategic and operational challenges is as much a human expectation experience as it is tactically strategic one. Read on to discover the elements behind a good strategy.

I think many credit union CEOs think consultants and strategic planners are “the proverbial consultant who rides into town, makes a big fuss and then rides out.”Often, this is a very accurate assessment of how certain one-size-fits-all consultants work.They have a canned template they attempt to use in every situation.With the diverse asset sizes and the variety of business plans within the credit union industry, not to mention the different regions of the country CUs are located in, that single template simply doesn’t work anymore – if it ever did. Every credit union’s leaders should craft their institution’s unique forward-looking strategic and operational plans.

Additionally, these days the state and federal regulators expect each credit union’s leaders to “own” their strategic plan and to treat strategic planning as an ongoing “way of life,” rather than as “an annual event.”They also believe that strategic planning is intertwined with enterprise-wide risk management as well as with a credit union’s risk philosophy, its risk policies and its risk-mitigation practices.Throw in regulator-mandated stress-testing and mandated liquidity planning, and it would seem that strategic planning is already a full-time “forward-looking” activity.And of course, a credit union’s strategic direction, its operational business plans and its annual budget are all integrally linked.

Risk Avoidance Hardwired in the NCUA Examiner’s Handbook

As an aside, I recently re-read the Management chapter in the “NCUA Examiners’ Handbook” that, among other things, covers the topics of strategic and operational planning.This is the chapter that guides the NCUA examiner toward assigning the “M” in the CAMEL rating.It was mostly the non-planning sections of the chapter – Red Flags, Board Responsibility, Board Oversight of Operating Management, Risk/Return Trade off, Conflicts of Interest and similar ones – that gave me the distinct impression that “risk-based examination” was a very accurate name for it.Or perhaps “risk-avoidance examination” would be more accurate.It’s no wonder that the NCUA examiners don’t want anyone to take any risks – risk avoidance is hardwired in the handbook.

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