Optimising Performance and Efficiency Series: Risk Management

This booklet provides a comprehensive risk analysis and management framework to help MFIs manage strategic and institutional risk in rapidly evolving landscapes. It is part of the Optimising Performance and Efficiency Series that provides guidance on a variety of topics from product innovation to delivery system optimization.

Risks are interrelated and can be of many types. Identifying risk and adopting an appropriate mitigation strategy can be a complex task that needs skills, preparation and commitment. The booklet presents guidelines for MFIs to deal with institutional, operational, credit and financial risk. It discusses:

• Lessons for MFIs on proactive risk management;
• Implementing risk management at MicroSave’s partner MFIs;
• Framework and challenges of institutionalizing risk management for MFIs;
• Process mapping for risk management and process improvement;
• Process mapping in practice;
• Internal control in small and medium MFIs;
• Loan portfolio audit in practice;
• Benefits of loan portfolio audit;
• Establishing a credit administration and control unit;
• Risks and challenges in individual lending;
• Diagnosing financial stress in the group lending methodology;
• Reasons that microfinance clients take multiple loans;
• Delinquency in self help groups;
• Provisioning for loan impairment in MFIs;
• Global financial crisis and Indian microfinance.