NCUA: Letter to Credit Unions No. 10-CU-03 – Concentration Risk (March 2010)

Avoiding concentrating too much in any single product or service is a core tenet of effective risk management and when violated increases the risk of loss to the credit union and to the NCUSIF. Too much reliance on any single product or service increases the potential for adverse consequences from “event risk” (i.e. a negative event, such as a housing market crash, that significantly affects the financial condition of the institution).