CAMEL Rating System - Business Strategy / Financial Performance

Business Strategy / Financial Performance

The credit union's strategic plan is a systematic process that defines management's course in assuring that the organization prospers in the next two to three years. The strategic plan incorporates all areas of a credit union's operations and often sets broad goals, e.g., capital accumulation, growth expectations, enabling credit union management to make sound decisions. The strategic plan should identify risks within the organization and outline methods to mitigate concerns.

As part of the strategic planning process, credit unions should develop business plans for the next one or two years. The board of directors should review and approve the business plan, including a budget, in the context of its consistency with the credit union's strategic plan. The business plan is evaluated against the strategic plan to determine if it is consistent with its strategic plan. Examiners also assess how the plan is put into effect. The plans should be unique to and reflective of the individual credit union. The credit union's performance in achieving its plan strongly influences the management rating.

Information systems and technology should be included as an integral part of the credit union's strategic plan. Strategic goals, policies, and procedures addressing the credit union's information systems and technology ("IS&T") should be in place. Examiners assess the credit union's risk analysis, policies, and oversight of this area based on the size and complexity of the credit union and the type and volume of e-Commerce services' offered. Examiners consider the criticality of e-Commerce systems2 and services in their assessment of the overall IS&T plan.

Prompt corrective action may require the development of a net worth restoration plan ("NWRP") in the event the credit union becomes less than adequately capitalized. A NWRP addresses the same basic issues associated with a business plan. The plan should be based on the credit union's asset size, complexity of operations, and field of membership. It should specify the steps the credit union will take to become adequately capitalized. If a NWRP is required, the examiner will review the credit union's progress toward achieving the goals set forth in the plan.