 |
Managing Uncertainty: A Guide for Credit Unions (2002)
Uncertainty. To many credit union executives, uncertainty is an unwelcome intrusion into well-laid plans and procedures aimed at smooth operations and predictable financial results. For most of us, uncertainty is an enemy, not a friend. However, without uncertainty your sponsor(s), credit union and even industry would not exist in its current form. Uncertainty is what drives change in the business climate.
Many of you are already thinking about questions such as: what happens if new competitors enter our field? What if our sponsor organization declares bankruptcy? How will interest rates change over the next ten years and what should we do about it? When you finish reading this report, we hope you will be even more aware of the uncertainties you face. In addition, we hope you will reframe how you view uncertainty. Rather than seeing it as an enemy, why not view uncertainty as a friend - something you can manage effectively to help your credit union be more successful.
The 19th Century banker Nathan Rothschild observed that "Great fortunes are made when the cannonballs are falling in the harbor, not when the violins play in the ballroom." And in many ways, it probably feels like the cannonballs are falling today. Whether times are good or bad, we believe there are opportunities to benefit from uncertainty - and a firm understanding of how you deal with the challenge will prepare you for embracing the often feared unknown. When we say profit, we don't mean "profiteer" or even just refer to money. Uncertainty creates opportunities to serve your members, staff and community better, provided you frame it the right way.
This report begins by listing some of the uncertainties many credit unions currently face to reinforce just how little we know about the future, even though we have to make difficult decisions on a daily basis that are impacted by these unknowns. Following this introduction, we examine three different financial segments - dealing with reinsurance, options trading, and credit unions - and contrast how two organizations managed uncertainty in each segment. Next, we introduce a framework that we developed through research at the Wharton School designed to help managers assess and accept the uncertainty, build the capabilities required to manage it, and finally choose tools that support success. This we refer to as the ABC framework. In addition to research conducted at the Wharton School, this report is based on interviews and surveys that were conducted with many credit union executives over a six month period.
The ABC framework is a learning framework that begins with self-assessment and diagnostic exercises to help you understand how you currently handle uncertainty. Then, it provides insights on how to build capabilities for managing uncertainty. It concludes with a detailed analysis of two frameworks that can help executives choose which tools to use in managing uncertainty. The frameworks should be used to help you explore uncertainty, rather than as a systematic approach for solving specific strategic challenges.
If you interested in getting additional information or would like to order copies of this report, please contact:
Credit Union Executives Society
5510 Research Park Drive
P.O. Box 14167
Madison, WI 53711
800-252-2664
www.cues.org
Uncertainty. To many credit union executives, uncertainty is an unwelcome intrusion into well-laid plans and procedures aimed at smooth operations and predictable financial results. For most of us, uncertainty is an enemy, not a friend. However, without uncertainty your sponsor(s), credit union and even industry would not exist in its current form. Uncertainty is what drives change in the business climate.Many of you are already thinking about questions such as: what happens if new competitors enter our field? What if our sponsor organization declares bankruptcy? How will interest rates change over the next ten years and what should we do about it? When you finish reading this report, we hope you will be even more aware of the uncertainties you face. In addition, we hope you will reframe how you view uncertainty. Rather than seeing it as an enemy, why not view uncertainty as a friend - something you can manage effectively to help your credit union be more successful.
The 19th Century banker Nathan Rothschild observed that "Great fortunes are made when the cannonballs are falling in the harbor, not when the violins play in the ballroom." And in many ways, it probably feels like the cannonballs are falling today. Whether times are good or bad, we believe there are opportunities to benefit from uncertainty - and a firm understanding of how you deal with the challenge will prepare you for embracing the often feared unknown. When we say profit, we don't mean "profiteer" or even just refer to money. Uncertainty creates opportunities to serve your members, staff and community better, provided you frame it the right way.
This report begins by listing some of the uncertainties many credit unions currently face to reinforce just how little we know about the future, even though we have to make difficult decisions on a daily basis that are impacted by these unknowns. Following this introduction, we examine three different financial segments - dealing with reinsurance, options trading, and credit unions - and contrast how two organizations managed uncertainty in each segment. Next, we introduce a framework that we developed through research at the Wharton School designed to help managers assess and accept the uncertainty, build the capabilities required to manage it, and finally choose tools that support success. This we refer to as the ABC framework. In addition to research conducted at the Wharton School, this report is based on interviews and surveys that were conducted with many credit union executives over a six month period.
The ABC framework is a learning framework that begins with self-assessment and diagnostic exercises to help you understand how you currently handle uncertainty. Then, it provides insights on how to build capabilities for managing uncertainty. It concludes with a detailed analysis of two frameworks that can help executives choose which tools to use in managing uncertainty. The frameworks should be used to help you explore uncertainty, rather than as a systematic approach for solving specific strategic challenges.
If you interested in getting additional information or would like to order copies of this report, please contact:
Credit Union Executives Society
5510 Research Park Drive
P.O. Box 14167
Madison, WI 53711
800-252-2664
www.cues.org