Risk Management System Development at Wisdom Microfinance
Wisdom Micro Financing Institution (S.C.) is a World Vision affiliated microfinance institution established in 1998 to provide financial service to micro-entrepreneurs and small-holding farmers in Ethiopia. MicroSave was contracted to develop risk management systems for Wisdom. As part of the assignment, MicroSave team developed a risk management matrix for use by the organisation. Subsequently, Wisdom decided to integrate the risk management policies in their policy documents as a part of overall management function. Further, specific risk owners were identified for each department to monitor and address the risks identified for that department. For every risk, monitoring indicators, reports, and threshold level of those indicators were also defined to regularly monitor changes in risk profile of Wisdom. A Risk Management Manual was prepared which was submitted to, and accepted by, the Central Bank of Ethiopia as their policy document on risk management.