ALEXANDRIA, Va. – A new Research Note released by NCUA’s Office of the Chief Economist has found that approximately one-quarter of all federally insured credit unions are in communities classified as having a relatively high or very high risk of experiencing negative effects due to natural hazards.
Using year-end 2021 credit union Call Report data and the Federal Emergency Management Agency’s National Risk Index, NCUA said staff from the Office of the Chief Economist estimated credit union exposure to climate-related physical risks.
Topline Findings
According to the agency, its research shows:
- The 25% of credit unions that are in communities at relatively high or very high risk of experiencing negative outcomes from natural hazards accounted for 34% of system-wide assets, or approximately $750 billion, at the end of 2021.
- Minority depository institutions face a substantially higher risk than the credit union system in aggregate.
- Credit unions most at risk of negative outcomes due to natural hazards tend to be located in coastal areas, particularly in California, Texas, and Florida. Together, these three states account for 11% of credit unions located in communities with an elevated risk and 22% of credit union assets.
Additional Findings
The research also examined the exposure of the credit union system to specific natural disaster risks, focusing on the 10 most costly natural disasters based on FEMA’s estimates of expected annual losses. Roughly half of credit union assets are in areas at a relatively high or very high risk of experiencing a natural disaster due to a tornado, and a similarly large share of credit union assets are in areas exposed to strong winds.
‘Credit Unions Not Immune’
“This insightful research by the NCUA’s Office of the Chief Economist shows that credit unions are not immune to climate-related financial risks and that the costs and number of climate-related natural disasters is accelerating, often hitting disadvantaged communities the hardest,” said NCUA Chairman Todd M. Harper. “By measuring, monitoring, and mitigating such risks, the NCUA can fulfill its core obligations of maintaining the safety and soundness of credit unions, protecting consumers, and safeguarding the National Credit Union Share Insurance Fund.”
Using year-end 2021 credit union Call Report data and the Federal Emergency Management Agency’s National Risk Index, staff from the Office of the Chief Economist estimated credit union exposure to climate-related physical risks.
The NCUA board will consider a request for information on climate-related financial risk at its meeting today.
OMWI Annual Report Delivered to Congress
Separately, NCUA has released its Office of Minority and Women Inclusion (OMWI) Annual Report to Congress on the agency’s diversity, equity, and inclusion (DEI) programs and initiatives in 2022.
The report also outlines the agency’s efforts in ensuring fair and inclusive business practices and assessing its regulated entities’ diversity policies and practices.
“For the U.S. credit union system to achieve its full potential and achieve its mission of meeting the savings and credit needs of members, especially those of modest means, diversity, equity, and inclusion must be at the forefront of our work at the NCUA,” Chairman Todd M. Harper said in a statement. “That’s why we encourage diversity throughout the credit union system, not only in the interest of the public good but also for the success and well-being of hardworking families in all communities, both now and in the future.”
The Accomplishments
According to NCUA, the OMWI 2022 Annual Report to Congress features a number of accomplishments, including:
- 481 credit unions (302 federal, 178 state-chartered, and one non-federally insured credit union) submitted a voluntary Credit Union Diversity Self-Assessment in 2022, up from 240 submissions in 2021.
- 45% of the NCUA’s total reportable contracting dollars for the year were awarded to minority- or women-owned businesses, and 38.5% of contract payments made during the year went to these vendors.
- 40.2% of new NCUA hires in 2022 were people of color.
- 17.1% and 4.3% of the NCUA’s workforce self-identify as having disabilities and targeted disabilities, respectively. Since 2017, the NCUA has consistently exceeded the federal employment rate goals for employees with disabilities and employees with targeted disabilities.
- 28.9% of the NCUA’s workforce participated in employee resource groups. This continues to position the agency at nearly three times the industry-standard membership goal of 10% of an organization’s workforce.
What Office Does
NCUA said OMWI is responsible for measuring, monitoring, and establishing policies for diversity and inclusion in the NCUA’s management, employment, and business activities. OMWI programs and services comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to develop and promote standards for workforce diversity, supplier diversity, and equal employment opportunity and to assess the diversity policies and practices throughout the credit union industry, the agency added.
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