The credit union industry turned the corner in 2013, but interest rate risk and cybersecurity threats pose major challenges, National Credit Union Administration Board Chairman
A growing economy, Matz explained, is putting pressure on interest rates, which are causing paper losses that can become real losses to credit unions. She urged the industry to avoid chasing short-term yields and instead keep investment portfolios that mitigate long-term risk. "It's easy to fall into the trap of chasing near-term profits by concentrating your portfolio in long-term investments, but falling into this trap will imperil your credit union," Matz said. "Credit unions cannot afford to ignore this; ignoring rising rates is like pitching a tent on the beach at low tide. That tide is shifting. This swing from unrealized gains to unrealized losses marks a dangerous warning of things to come. Make sure your credit union is in a safe position." Attacks on Cybersecurity Taking a Toll
Matz described the growing threat of high-tech thefts of information and money from financial and retail institutions. She warned that cyber-terrorism may be an even greater challenge. Cyber-terrorists differ from cyber-thieves in their objective: Terrorists want to cripple or destroy critical infrastructure here in
"Attacks, intended to create disruption, can crash networks but can also serve as a diversion for more damaging assaults," Matz said. "Imagine cyber-terrorists stealing passwords from your credit union and using your credit union as an entry point to gain access to every payment system and every vendor with which you have a digital relationship. Think about the damage they could do. The worst-case scenario doesn't just deny services; it destroys security and dismantles systems." Matz revealed a new NCUA webpage featuring a wealth of information on cyber-threats, tactics and preventive measures. She also pointed out that
* Implement appropriate risk-mitigation controls to better protect, detect and recover from cyber-attacks. This includes vendor due diligence, strong password policies, proper patch management, employee training and network monitoring.
* Make sure IT staff and vendors are on top of emerging cyber-threats. Hire experts who can be counted on to answer the very tough question: "Is my credit union really protected?"
* Get educated. Share cyber-security best practices with each other at league meetings, chapter meetings and professional groups. Participate in national information-sharing forums.
"Keeping a house in order requires constant maintenance," Matz concluded. "Yes, the worst of the storm is behind us. The sun is starting to peek out from the clouds. So now's the time to fix the roof."
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