By Sreya Ray, IFMR Capital
IFMR Capital recently hosted the Annual Risk Workshop for its MFI partners. The concept of the workshop was to provide a common platform for capital providers/financiers and clients, and share our risk management principles and workings.
IFMR Capital believes that holistic risk management that extends beyond operational risks and process audits is integral to the long term sustainability of an organisation. Risk management should cover various aspects of credit risk, operational risk, market risk, political risk and regulatory risk, and asset-liability management. The Risk Workshop was structured to cover the various aspects of risk as we perceive and evaluate it today, which in turn is based on our Underwriting Guidelines, risk frameworks and our policy initiatives in the sector.
Senior level executives from 15 MFIs across the country flew in for a day of structured workshops, discussions, and case studies with the IFMR Capital team. Before the workshop kicked off, the guests were asked to fill in a questionnaire to rate the severity of various risks in the MFI sector and how prepared each MFI felt they were to deal with such risks. This process set the tune for the workshop and later once the results were in, it emerged that the three most severe risk factors for IFMR Capital’s MFI partners were: Political Interference, Liquidity and Regulation. This was in contrast to the global survey of risk perception among MFIs across the world, which viewed Credit risk, Reputation and Competition as their top three risk worries. However, the MFI partners rated themselves just as ready and prepared as their global counterparts to deal with these risks.
The schedule of the workshop covered the spectrum of IFMR Capital’s risk management system – right from risk modelling and tools to consumer protection to monitoring to best practices observed.
By walking our clients through the processes and workings that IFMR Capital has in place to manage risk, we hoped that we could have each party in clear understanding of how the other analyses and manages risk. In addition, feedback from our MFI clients was sought and encouraged. The day closed with a presentation and discussion on best practices for risk mitigation, which was a summing up of industry observations made by the monitoring team over the years across a wide range of MFI centres and geographies.