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Risk in Microfinance Coaching at the National Microfinance Bank, Jordan

Risk in Microfinance Coaching at the National Microfinance Bank, Jordan. Yves Mathieu Consultant. Risk Management – Excellence in Microfinance Workshop – Past Story Board. 2006 – European Microfinance Week Workshop "Challenges for MFIs in Risk Management"

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Risk in Microfinance Coaching at the National Microfinance Bank, Jordan

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  1. Risk in Microfinance Coaching at the National Microfinance Bank, Jordan Yves Mathieu Consultant

  2. Risk Management – Excellence in Microfinance Workshop – Past Story Board • 2006 – European Microfinance WeekWorkshop "Challenges for MFIs in Risk Management" • Needs analysis with a limited survey sent to 7 major MFIs • Results • Organization and training • Implementation • Workshop, with the first edition in 2008, supported by ATTF, ADA and PRiM (the 5th edition is currently running) • Coaching process with remote assistance, with 6 MFIs selected after the 2008 workshop, with 2 MFIs from Jordan

  3. Alwatani - National Microfinance Bank • Alwatani NMB was established on 15/7/2004 • Social objective • Alwatani has a strong official support (Royal family) • 30 000 + active borrowers • Gender : 92% female customers • 16 mlns EUR gross loan portfolio • Average loan : 550 EUR

  4. Objective of the first mission in 2009 • To Set up an effective risk management structure with authority and appropriate notification structure; which includes: • Establishing an independent risk management function reporting directly to senior management • Empowering professionals with appropriate skills to perform their required duties • Installing systems capable of measuring, managing and reporting risks in a timely and accurate manner • After the visit, NMB started a risk function and established risk team consisted from key risk persons

  5. Second visit in 2010 • NMB was guided to the best practices in setting and applying the risk policies and spreading the risk culture • Visit helped to decide the allocation of Risk dept in the organizational structure and define the communication channels, responsibilities, roles … • Formulating the risk committee • Segregation between risk and credit risk functions • Guiding to new risk areas such as risks related to staff satisfaction, reputation risks…

  6. Lessons learned • Generally speaking, confusion of concepts • Risk and audit • Risk and strategy • Risk and governance • Weak “real” awareness, just formal statements, about risk management if main consequences are not clearly explained • Concrete risk management is a pure management decision, even if the institution is small – Importance of adequate resource allocation • Communication is important • Keep it simple

  7. Thanks for your attention !

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