AuditLink, a division of CU*Answers, the Michigan core data processing CUSO known for providing CU*BASE, has announced a new offering to assist credit unions in complying with recently published concentration risk monitoring requirements.
NCUA Letter 10-CU-03 requires credit unions to manage concentration risk and defend their capital position with respect to segmentation development in typical areas such as Real Estate Loans, Commercial Loans, Investment Portfolios and Unsecured Lines of Credit. In addition to segment determination, credit unions must also evaluate any “named borrower” relationship which may be considered a concentration risk as a percentage of capital.
In response to this newest regulatory letter to credit unions, CU*Answers has developed a model that uses its core system, CU*BASE, to assist in evaluating concentration risk with the associated segments of a credit union’s portfolio. According to CU*Answers, there are no empirical models available for testing. “This is an end-to-end solution,” says Jim Vilker, NCCO and VP of Professional Services for the CUSO. “It is designed to guide credit unions through the thought process in development of their segments, to associate economic variables to stress these segments, and then create a policy for the credit union board that is defendable,” Vilker continues.
The Concentration Risk Model and accompanying policies are free to clients within the cuasterisk.com network to utilize on their own, or they may hire an AuditLink Associate to perform the evaluation process and monitor the critical data on a quarterly basis.