Meaningful & Strategic Stress Testing: A Valuable Board & Management Tool

Thursday, December 1, 2016

10:00 am - 11:30 am HST
12:00 pm – 1:30 pm PT
1:00 pm – 2:30 pm MT
2:00 pm – 3:30 pm CT
3:00 pm – 4:30 pm ET

A 2011 NCUA Letter (11-FCU-02) stated, “A director must understand the specific activities in which his or her credit union engages. In particular, a director must understand not only how these activities generate revenue for the credit union but also, and perhaps most importantly, the various risks associated with these activities that could lead to financial loss.”

To understand the potential financial loss, regulators want all credit unions, regardless of size, to use stress testing to identify and assess potential current and future loss exposure. Stress test results are important to incorporate into your strategic planning process. That process includes establishing or reviewing the credit union’s risk appetite or risk tolerance level and establishing strategic goals and objectives – profitability, growth, funding, new products and services, marketing philosophy, personnel needs, and physical structure needs.

For most credit unions, their complexity and loan portfolio size largely determine how thorough or complicated stress testing must be. This webinar will focus on various approaches to stress testing the loan portfolio as suggested by NCUA.

Continuing Education: Attendance verification for CE credits upon request


  • Directors and management duties, including a forward-looking risk assessment and providing general direction and control
  • Preparing for a regulatory safety and soundness examination
    • Do you have a portfolio loan stress model and process?
    • Can you interpret the process and justify the methodology to regulators?
  • What can be done without purchasing a sensitivity model?
  • Elements of scenario analysis and creating a reasonable scenario
  • Suggested process
    • Loan portfolio stress testing using scenario analysis
    • Level of stress
    • Establishing loan loss rates – differs from current ALLL process
    • Measuring risk and reward – setting risk appetite
  • Regulatory illustrative models and alternatives

    • Employee training log
    • Quiz you can administer to measure staff learning and a separate answer key


This informative session is for all directors, CEOs, presidents, CFOs, chief risk officers, senior credit officers, senior lenders, commercial loan officers, business loan officers, credit analysts, and members of the risk management team.

PLEASE NOTE:    Webinar content is subject to copyright and intended for your individual financial institution’s use only.