I recently taught one of my Enterprise Risk Management (ERM) webinars and after the webinar, participants had two questions: What are the challenges risk leaders face? And how do we address those challenges?

Here are the top challenges risk leaders face while implementing an ERM program and how to address each one:

Lack of support from senior leadership: This is the number one challenge they face. The “Tone at the Top” is crucial and you need support at the board level. To get the attention of the leadership team and the board of directors, you have to create awareness and get educated on the subject. You need to prepare a plan of action as to how you will implement an ERM program. Most importantly, you need to address the “why” it’s important for the survival of your community bank or credit union. Even if it’s still not a regulatory requirement for most community financial institutions under $500MM in asset size (maybe even the $1 billion asset size), regulators are starting to ask for a formal program. But most importantly, establishing an ERM program is a matter of best practice.

You are the designated person to wear yet another new hat and you don’t know how to do it on your own: You’re right. You cannot do it on your own. That’s why I call those in charge of developing the ERM program the “ERM Leader.” You are responsible to “lead” the program but not one person can do it on their own. It takes an entire team that represents ALL the areas of the community bank or credit union. One person can represent more than one area, but all departments must be represented so you can identify ALL the potential risks that can impact your institution.

Lack of time to implement the entire ERM program: To implement a complete ERM program, it will take you a minimum of three months up to an entire year. It takes time because each piece of the puzzle takes time to create, implement and complete. Then each document or program needs to be approved first by the risk committee and ultimately by the board of directors and that can take several meetings until it gets on the board’s agenda. Again, you cannot do the entire program on your own. You complete it with the entire team throughout several months.

How do I know I have all the pieces? You continue your training to learn what you may be missing. Some key components of an ERM program are:

• Write and implement an ERM policy
• Establish a risk committee at the board level
• Write a board risk committee charter
• Establish an internal ERM committee
• Write an ERM committee charter
• Develop a board risk appetite and tolerance statement

Most institutions already have several of the sub-programs that are part of the overall ERM program such as the Compliance Management System, the Internal Audit Program, and the IT Security Program which in turn includes your Cybersecurity Program, Vendor Management Program, Disaster Recovery Plan, Business Continuity Management and other sub-programs.

I hope this information helps you further enhance your ERM program.

Part 2 of this posting is here.

Treasury Management aka Cash Management is the best kept secret in bank fee generation. Why? Because many business bankers don’t know these services well and, therefore, are afraid to talk about them with customers and prospects. When I was starting my banking career, I was the secretary in the cash management area of the bank. Part of my job was to type (over and over) sales proposals for the cash management sales team.

One of my happiest days in that department was the day I got my first PC and I had a revolutionary idea—create a cash management proposal manual where the sales team could simply pick out whatever pages they wanted to use on every product to respond to the “RFP’s” (request for proposal). Creating this manual reduced the amount of time I spent typing a proposal from several hours to about fifteen minutes. And if the sales rep changed their mind about a service? No problem. I could fix it or add or change anything within a few minutes. I was the hero of the department!

But kidding aside, from all that typing about each service and during my six years in the cash management department, first as a secretary, later as an operations liaison, and then customer service representative, gave me the opportunity to learn about cash management products that banks offer. I became very knowledgeable about cash management and to this day I remember what each product does, why it’s offered to business banking customers, and how it works behind the scenes—including how banks can improve fee income! A few years ago, the term cash management was changed (or should we say “updated”) to Treasury Management to reflect the vast number of services offered to help business clients.

So, we’ll use the term treasury management to refer to business banking products and services designed specifically for business customers and sold by business banking sales teams or treasury management sales teams.

What is treasury management anyway? My own simple definition: Treasury management are all the banking services banks offer to business clients to help them handle and maximize their cash on a daily basis.

Below are some of the most known treasury management products:

• Account Reconciliation
• Accounts Payable (AP) / Accounts Payable (AP) Automation
• ACH Origination Services
• Armored Car Services / Cash Collection
• Automated Cash Handling
• Balance Reporting
• Business Check Card
• Business Credit Cards
• Business Online Banking
• Cash Concentration
• Controlled Disbursement
• Escrow and Sub-Accounts
• Health Savings Accounts
• Merchant Credit Cards
• Multi-Currency Accounts
• Positive Pay / Reverse Positive Pay
• Remote Deposit Capture
• Remote Safe / Cash Recycling
• Sweep Services
• Retail / Wholesale Lockbox
• Wire Transfers
• Zero Balance Accounts

If you are a business banker, it is important to learn more about treasury management services. They will significantly increase your fee income, bring in deposits to help fund loans, and business clients will be better served. As a result, your bank’s profitability will increase.

Looking for ideas to expand your Treasury Management reach to new business customers? Look into the TMClarity Framework, our comprehensive and transformative training and Treasury Management business management system that leads to greater sales success, higher margins, and increased customer retention in a competitive marketplace.