Risk in Microfinance Coaching at the National Microfinance

Risk in Microfinance Coaching at the National Microfinance Bank, Jordan Yves Mathieu Consultant contact@e-mfp. eu www. e-mfp. eu

Risk Management – Excellence in Microfinance Workshop – Past Story Board n 2006 – European Microfinance Week Workshop "Challenges for MFIs in Risk Management" n Needs analysis with a limited survey sent to 7 major MFIs n Results ¡ Organization and training n Implementation ¡ Workshop, with the first edition in 2008, supported by ATTF, ADA and PRi. M (the 5 th edition is currently running) ¡ Coaching process with remote assistance, with 6 MFIs selected after the 2008 workshop, with 2 MFIs from Jordan contact@e-mfp. eu www. e-mfp. eu

Alwatani - National Microfinance Bank n n n n 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 contact@e-mfp. eu www. e-mfp. eu

Objective of the first mission in 2009 n 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 n After the visit, NMB started a risk function and established risk team consisted from key risk persons contact@e-mfp. eu www. e-mfp. eu

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

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

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