Management is responsible for identifying, monitoring, measuring and controlling (i.e., managing) the risks faced by the credit union. Their ability to manage these risks determine whether the credit union can correctly diagnose and respond to financial stress. Examiners should not assess management solely on the credit union’s current financial condition, nor should the management rating be only an average of the other component ratings.

After collecting, reviewing, and properly interpreting all appropriate data, the examiner arrives at conclusions. In this part of the total analysis process, the examiner identifies concerns, explains the causes, and assesses risk to arrive at a CAMEL rating. The examiner will determine the level (high, moderate, or low) of the overall strategic, interest rate, credit, liquidity, transaction, compliance, and reputation risks. The examiner will also evaluate the direction of these risks (increasing, unchanged, or declining).

The CAMEL rating culminates the examination process. Key ratios alone do not automatically determine the rating. Examiners should look behind the numbers to determine the significance of supporting ratios and trends. When evaluating the components of CAMEL, examiners look at the seven risks discussed in the Risk-Focused Program Chapter qualitative considerations outlined in the Letter to Credit Unions discussed above before determining a final rating. Examiners have the discretion to increase or decrease any rating they deem necessary using their professional judgment.

Credit unions should have in place a risk management program that includes a strategic plan with implementing policies, procedures, and internal controls necessary to manage the risks inherent in their operations. Successful risk management programs rely on credit union management to employ sufficient staff and have available necessary resources to identify, measure, monitor, and control existing and potential risks.

As credit unions have steadily recovered from the financial crisis, NCUA is now able to devote more resources to focusing on the future of the credit union industry.  In 2014, NCUA will be working to ensure that credit unions identify and mitigate forward-looking risks before they threaten the viability of credit unions and the stability of the Share Insurance Fund. 


Prompt corrective action for “significantly undercapitalized” credit unions.

(a) Mandatory supervisory actions by credit union. A federally-insured credit union which is “significantly undercapitalized” must—

(1) Earnings retention. Increase net worth and transfer earnings to its regular reserve account accordance with §702.201;

(2) Submit net worth restoration plan. Submit a net worth restoration plan pursuant to §702.206;