Adapting Credit Union Risk Management for Climate Change
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Authors
Stafford, Robert
Issue Date
2025-12
Type
Dissertation
Language
en
Keywords
banking , credit union , climate change , risk management , climate-related financial risk , physical risk , credit risk , green banking , green lending , climate adaptation finance , regulation
Alternative Title
Abstract
The business problem explored in this study relates to how credit union financial and risk managers adapt their organizations to address climate-related financial risk. The information in this study can guide finance and risk management professionals at community-sized credit unions as they determine how best to incorporate climate-related financial risk into their risk management programs. The research questions (RQs) in the study addressed how credit union financial and risk management professionals define climate-related financial risk, what actions they are currently taking or planning to take to measure this risk, and what progress they are making on developing organizational responses to this risk. The study was delimited to finance and risk management professionals working at credit unions with less than $10 billion in assets and headquartered in Idaho, Oregon, and Washington. The study used a qualitative methodology with a basic design, and the data were gathered using semi structured interviews. Eighteen participants were selected, representing 17 unique credit unions that were chosen using convenience and snowball sampling. Open and axial coding were used to generate categories and themes. The study findings could benefit credit union and bank leaders who are beginning to estimate their exposure to climate change risk. It also informs regulatory agencies that supervise these institutions by providing information about what is being done and not done by institutions in the region. The study participants believed that credit risk would be most highly impacted by climate-related natural disasters in the region and suggested current expected credit losses (CECL) qualitative factor adjustments, mapping member locations against areas known to have a high risk for climate-related events, and tightening of underwriting standards as potential strategies for mitigation. Recommendations for practitioners include estimating member exposure, participating in the Partnership for Carbon Accounting Financials (PCAF), collaboration and information sharing with other credit unions, and adopting green banking practices. Recommendations for future study include analyzing the effect of climate-related risk on credit union performance metrics, estimating the financed greenhouse gas (GHG) emissions of credit unions to ascertain climate-related transition risk, and developing an approach to estimating a qualitative factor adjustment for climate-related risk in the CECL calculation.
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Attribution-NonCommercial-NoDerivs 3.0 United States
openAccess
openAccess