Federal banking regulators were recently requested to remove the use of “reputation risk” or similar concepts from their supervisory and examination materials. In response, the National Credit Union Administration (NCUA) announced on September 25, 2025, it will no longer consider reputation risk as part of its examination and supervisory process. Supervisory concerns will no longer be based on reputation risk, and examiners have been instructed accordingly.
While this marks a shift in regulatory oversight, it’s important to recognize that reputation risk hasn’t disappeared. It’s no less important to your organization. It’s simply no longer part of the NCUA’s formal supervisory framework.
Why Reputation Still Matters
Reputation risk remains deeply embedded in the strategic, operational, and member-facing aspects of your credit union. It influences:
- Strategic Planning: Your reputation affects partnerships, growth opportunities, and member and community trust. A misstep can derail long-term goals and objectives.
- Operations: From vendor relationships to internal controls, reputational considerations shape how you manage risk and deliver services.
- Member Service: Trust is the foundation of member loyalty. A damaged reputation can lead to member attrition, reduced engagement, and overall loss of business.
- Mission & Vision Execution: Your credit union’s purpose is built on values, likely including integrity, service, and community. Reputation is the lens through which those values are judged.
- Employee Engagement: Employees desire to work for an organization with a solid reputation. Neglecting reputation will create hardships in attracting and retaining qualified personnel.
Even though regulators may no longer cite reputation risk in exams, the consequences of reputational damage, including loss of member and community confidence, public scrutiny, and diminished influence, remain very real.
Moving Forward Thoughtfully
Credit union leaders and boards should continue to treat reputation risk as a core consideration in governance, strategy and decision-making. These risks should continue to be identified, assessed and managed actively as part of credit union ERM programs. ERM programs were never intended to be about regulatory compliance… it’s about organizational resilience and mission fulfillment!
As the NCUA updates its manuals and guidance, now is a good time to revisit your own risk management framework. Ensure reputation risk is still addressed in your strategic planning, ERM assessments, risk appetite, and other board discussions.
Because while the regulator may no longer be watching for it, your members, and your mission, certainly still are.