CAMEL Rating System - Other Management Issues

Other Management Issues

Other key factors to consider when assessing the management of a credit union include, but are not limited to:

• Adequacy of the policies and procedures covering each area of the credit union's operations (written, board approved, followed);
• Budget performance compared against actual performance;
• Effectiveness of systems that measure and monitor risk;
• Risk-taking practices and methods of control to mitigate concerns;
• Integration of risk management with planning and decision-making;
• Responsiveness to examination and audit suggestions, recommendations, or requirements;
• Compliance with laws and regulations;
• Adequacy of the allowance for loan and lease losses account and other valuation reserves;
• Appropriateness of the products and services offered in relation to the credit union's size and management experience;
• Loan to share ratio trends and history;
• Market penetration;
• Rate structure; and
• Cost/benefit analysis of major service products.

The board of directors and management have a fiduciary responsibility to the members to maintain very high standards of professional conduct:

1. Compliance with all applicable state and federal laws and regulations. Management should also adhere to all laws and regulations that provide equal opportunity for all members regardless of race, color, religion, sex, national origin, age, or handicap.
2. Appropriateness of compensation policies and practices for senior management. Management contracts should not contain provisions that are likely to cause undue hardship on the credit union. The board needs to ensure performance standards are in place for the CEO/Manager and senior management and an effective formal evaluation process is in place and being documented.
3. Avoidance of conflict of interest. Appropriate policies and procedures for avoidance of conflicts of interest and management of potential conflicts of interest should be in place.
4. Professional ethics and behavior. Management should not use the credit union for unauthorized or inappropriate personal gain. Credit union property should not be used for anything other than authorized activities. Management should act ethically and impartially in carrying out appropriate credit union policies and procedures.