For the next decade, only the prepared will thrive. The post-recession environment requires serious strategic planning for a future very different from the one you envisioned as you developed your community bank's last strategic plan. Community banks that haul out the same old responses, anticipating the same old risks, will be much less successful coming out of the recession than they were going into it.

Winners in the next decade will take a broader view of risk, uncovering any threat to their organizations. They will know that many risks that they're already monitoring can tip into serious consequences with a much smaller nudge from the business environment. So successful community banks will monitor, and respond to, challenges that go way beyond basic credit risk.

Let's look at factors raising new challenges to your community bank's ongoing success.

Reputation. Customers everywhere have seen reports of banks being closed in their state, in communities they know. So the least hint in any public forum that you are underperforming can snowball into actual, not just perceived, problems for your bank.

Customer expectations. Many customers are changing their financial habits. Their personal financial worries combined with ominous discussions in the media have made many less tolerant of risk and more cautious about debt. Expect more customers to keep more of their funds in safe, low-risk savings.

Corporate culture. With a huge retirement bulge on the horizon, companies will lose much of the knowledge that kept things running smoothly for years. Undocumented practices and contacts will eventually bring inefficiencies and higher costs.

Regulatory oversight. Some regulators were frankly embarrassed by the consumer abuses and risky practices of the largest bank and nonbank institutions, and they intend not to be caught flat-footed again. Legislative bodies will continue to alter the mandates and powers available to them. Rules and standards that once applied mostly to much bigger organizations could suddenly appear in your in-basket.

Demographic shifts. In the next 5 to 10 years, many financial institutions will encounter very different customer profiles. In some markets, a much larger portion of young adults will be immigrants who could have a very different- or no-understanding of financial services. Failure to adapt communication and education efforts accordingly could lead to rapid loss of market share.

Legal demands. If the regulators don't get you, the lawyers will. To start with, some customers in dire financial straits will take desperate measures, using aggressive legal means to reduce their liabilities. This makes every bank more vulnerable to legal attack. This broader spectrum of risk will demand new responses at multiple levels.

Processes, systems and people. An effective response requires the right tools and the right people with the right training to use those tools. Revised processes and procedures that formalize new strategies are your community bank's first defense against changing conditions. However, developing new practices and guidelines will take staff time and require additional employee training, new forms and documents, and updates to software and templates.

Financial statements. As you perform strategic planning around risk and response, you also should develop new projections for your bank's financial statements to monitor success and evaluate the effectiveness of measures taken to thrive in the next decade.

The banking environment is changing rapidly, risks are evolving dramatically, and you need time to develop and consolidate effective responses through appropriate procedures-those supported by strong systems and delivered by enlightened employees. Now is the time to evaluate your community bank's market, adapt strategic plans to respond to a new world of risk and plan the deployment of people and resources to generate powerful responses to current and coming threats.

Author affiliation:

Jeff Judy is principal of the consulting firm Jeff Judy & Associates in Bloomington, Minn. Reach Judy, a regular ICBA seminar instructor, at jeff@jeffjudy.com.