We have customized the Risk Management framework and tools used by commercial banks to the requirements of MFIs – in partnership with IFC.
Risk Management
The framework covers the following five areas related to risk:
| Governance | Strengthen the organizational architecture for effective risk governance Develop reporting structures and mechanisms to ensure compliance with regulations, code of conduct Specify board authorised risk policies and limits. |
| Liquidity and interest rate | Strengthen Assets and Liability Management tools and systems. Apply tools for scenario analysis and stress testing, analysing effect of multiple scenarios on the balance sheet of an MFI especially its liquidity. |
| Market fluctuation | Develop policies and tools to manage the effects of market fluctuations in foreign exchange and investments exposure |
| Credit | Develop credit policies, credit risk assessment and scoring models, Apply portfolio concentration assessment framework and portfolio quality analysis tool |
| Operations | Apply self-assessment tools (Risk Control Self Assessment (RCSA) to identify risk events, assess control systems and note early warning key risk indicators; formulate policies for IT, business continuity and disaster management, whistle blowers; develop reporting systems with Key Reporting Indicator (KRI) dashboards. |
Team visits take place over a period of 6-12 months, starting with a full Risk Diagnostic to identify the gaps.The approach builds organisational capacity to have timely identification of most of these risks, to make appropriate strategic decisions, and to build required control systems and adequate capital resources to manage risks.
M-CRIL has worked with leading institutions in India, Nepal and Timor Leste on capacity building for risk management or credit risk management.
Contact our Managing Director & Co-founder, Sanjay Sinha – sanjaysinha@m-cril.com for more information.
