National Credit Union Administration (NCUA) research maintains that 25 percent of federally insured credit unions are in communities identified as having a high or very high risk of negative natural hazards impact.
The NCUA’s Office of the Chief Economist recently released the research findings. The work stemmed from year-end 2021 credit union Call Report data and the Federal Emergency Management Agency’s National Risk Index.
“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,” NCUA Chairman Todd M. Harper said. “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.”
Research findings also showed 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 that include California, Texas, and Florida; and roughly half of credit union assets are in areas at a relatively high or very high risk of experiencing a natural disaster due to tornado, and a similarly large share of credit union assets are in areas exposed to strong winds.