Managing risks appropriately strengthens an MFI’s credibility on the market and generates new growth opportunities.
Like all financial institutions, an MFI is exposed, on a daily basis, to numerous internal and external risks which represent a threat to its stability, profitability and sustainability. It is therefore essential to be able to calculate and manage these risks effectively. Whilst it may be impossible to control external causes of disruption and upheaval, it is possible to prepare for these eventualities in order to limit their impact. Internal issues, such as credit and liquidity risk, market and pricing, operations and compliance can all be managed thanks to quantitative methods of identification, monitoring and control of the different factors involved.
The Risk Management Graduation Model for MFIs (RMGM) is a practical tool presented in the form of a road map to be followed in order to carry out an assessment and to identify pathways to improve the risk management of an MFI. On the basis of an assessment process, an MFI can evaluate its system, structure and current risk management capacity against the best practices in the sector.
The “Risk Management Initiative in Microfinance” (RIM) has developed this tool, which is based on current good risk management practices, in accordance with the Basel regulation and has adapted it to microfinance.
ADA provides you with support to analyse your risk management using the RMGM tool. This analysis will enable you to assess the current situation and to issue recommendations for the progressive and optimal structuring of your institution’s risk management.
We offer two forms of technical assistance to help you to improve your risk management: