Risk Management for MFIs

Risk ManagementRisk Management for MFIs is one of the most critical aspect to any financial institution working in the space of financial inclusion. What makes microfinance special is the absence or near absence of traditional risk mitigation mechanisms like collaterals and guarantees. Therefore, the management of credit risk and operational risk becomes extremely important.

Other financial institutions, or those providing those providing technology enabled financial services in the financial inclusion space, face newer types of challenges related to operations and technology. In addition, there is always a risk of failure in the strategic choices made by a financial institution.

MicroSave has been working in the area of risk management for over a decade and has developed its own risk management toolkit customised to the needs of financial institutions working in the space of Financial Inclusion.

The toolkit was developed with the support of Standard Chartered Bank using their propriety risk management material. Moreover, in our engagement with financial institutions, we help them develop a risk management framework which enables the key risks to be identified.

On the basis of the key risks, mitigation, monitoring and reporting framework is developed and risk managers are identified. This ensures that risk does not remain a concept but gets integrated into the functioning of the institution.

Some specific benefits that MicroSave’s clients have derived from our technical assistance on risk management include:

  • Improved Understanding of Business and Risks
  • Strengthened Governance
  • Satisfying Supervisory Authorities
  • Proactive Management
  • Enhanced Compliance with Procedures
  • New Risk Management Functions

Our work in the space of Risk Management has helped financial institutions to manage risk and benefit every link in the chain from intermediaries to customers. There have been improvements in how the policies, processes, and procedures are developed, implemented, monitored and audited.

Our work has helped financial institutions to have increased reliability, trust and reputation among customers, resulting in better uptake of products and enhanced business volumes. Customers on the other hand, have experienced improved service quality and a safe and secure ecosystem where they can transact without fear of being defrauded.

Click here to contact us for more information about our initiatives regarding risk management for MFIs.