Steering through the COVID-19 winds of change

Credit unions must balance helping members with managing institutional risk.

Just as a rising tide raises all boats, a low tide can bring many a ship, even the most sturdy and steadfast, to ground. In many ways, the COVID-19 pandemic has been a financial and economic low tide that has affected businesses and individuals alike across the globe. In this low-tide environment, credit unions have taken on the role of captain, helping their members navigate through current conditions to more stable waters while also charting a course for organizational stability and viability.

One of the largest challenges being faced is loss of income during state-mandated stay-at-home orders and voluntary quarantines that have caused some businesses to shutter—some for the short term and others permanently. Although we really can’t predict much with certainty yet because so many variables are unknown, experts at Goldman Sachs think the U.S. will experience a peak unemployment rate of 25% before recovery begins. Unemployment rates, of course, have a direct correlation to financial institution performance in the form of loan delinquencies, non-payments, and portfolio charge-offs.

Maintaining an Even Keel

Credit unions have the challenge of balancing their care and compassion for individual member circumstances on one hand with organizational management, business prosperity and the financial well-being of their collective membership on the other. The method to accomplish this is two-fold, requiring in-depth customer analysis and service combined with effective and comprehensive institutional risk mitigation programs.

 

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