Third Party IRR Process Validation

IRR ValidationThe third party review is frequently requested by regulators who would like to see an independent or outside review of the quality and effectiveness of the credit union’s IRR management process. This review also meets the requirement of the recent IRR regulation requiring board of directors to ensure a review is completed. An important aspect of a Third Party review also includes identifying potentials for performance improvement while mitigating resource requirements and the risk of loss due to IRR exposure.

All of the work will be conducted by one of our seasoned ALM/IRR professionals to optimize your results. An IRR Management Process Review Consists of the Following Elements:

  • A review of the IRR Policy to ensure the completeness and effectiveness of the policy. This will include identifying potential for enhancements.
  • An overview of the IRR management process to address the roles of the board of directors, ALCO, and executive management. The review will also touch on the level and effectiveness of the internal controls supporting the IRR management.
  • A review of the IRR measurement and monitoring system to ensure all material IRR sources are identified, measured, and monitored. The outcome may include suggestions, improvements, and enhancements to the overall process.
  • A review of the decision making process that includes the utilization of the IRR measurement and monitoring system.
  • Back testing of the credit union’s model output to actual results over a recent historical period.
  • A written summary report including the findings encountered in the review, recommendations for corrective action when needed, and possible potentials for improvements.
  • A Presentation of the written summary report can be provided either via a phone call, on-line meeting, or in-person. Travel expenses for the in-person visit will be billed separately.

Optional Components:

A side by side comparison of the output from the credit union’s model to that provided by our own model when using similar inputs and assumptions.

If Third-Party IRR Management Process Review is for you please click on or call Michelle at (800) 268-7795 for further information.

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