In this Seminar you will learn the following topic areas:
Problem Statement: The board is responsible for setting the tone at the top for an institution’s risk appetite. However, many MFI boards take a reactive role in responding to risk, reacting to risk management issues rather than proactively approving policies and risk limits which reflect the risk appetite of the institution. Instead of proactively address risk in a holistic nature by identifying and planning for risk management improvement within the business planning process, institutions often focus on some risk areas (liquidity, credit, etc.) and not others (strategic, reputational, etc.), not properly understanding the interrelated nature of the risks themselves. Boards have a large job and precious little time to do it. Lack of a proper understanding of the strategic nature and technical elements of risk management can cause a temptation to rely too heavily on estimates generated by risk measurement systems and tools (if they exist), rather than fully understanding and using their business judgment to challenge the underlying assumptions. Board dynamics issues can also pose serious threats to effective risk governance.
To govern risk well, board members need to: 1) establish and communicate a clear and transparent institutional risk appetite, 2) ensure formal and systematic risk management and monitoring tools are being applied and functioning properly, and 3) establish formal and systematic reporting channels which can ensure risk management information is reviewed, understood, and acted on by both board and senior management, and 4) develop the intangibles for good risk management.
- Understand the components of a comprehensive risk management framework for MFIs and the interrelatedness of these components
- Understand the concept of risk appetite, including the setting and monitoring of an institution’s risk appetite.
- Understand the role risk management plays within the strategic planning process (including the roles and responsibilities of shareholders, board, senior management, risk committee, etc. within this process)
Technology Trends and Innovations
Problem Statement: MFI boards, and particularly boards in Africa, face difficult strategic choices regarding how to adopt and utilize new technologies, both to improve existing operations and introduce new business models. The sector has experienced an influx of new financial service providers from telcos to traditional banks moving down market to online lending platforms and retail credit providers. The rapid emergence of new providers and technologies has accelerated the pace of change making it hard for boards to decide what investment to make at any given time and how best to monitor those investments once a decision is taken.
Given the speed of the changes within markets, there is a natural tendency for institutions—driven by either board or management—to attempt to respond quickly based on “quick and dirty” assessments without fully engaging in the strategic planning to properly understand how a new technology project will support the overall business goals of their organization. To avoid this, boards need a systematic way of assessing both the strategic need and the technological opportunities available in the market to advise their businesses accordingly. Of course having a well-defined technology strategy is only the first step in harnessing the full potential of the new technologies in the market. To ensure successful implementation and adoption of new technology based products and services, boards need to fully appreciate the types of decisions that are likely to emerge once the investment decision is taken and to know how best to monitor the success of these projects over time.
- Understand key trends and new technologies in the financial sector, with an appreciation of the pros/cons and common challenges associated with each. Focusing on: 1) Innovative core banking solutions, including possibilities for cloud-based platforms. 2) Delivery channel solutions including mobile banking, ATMs, POS, Internet banking and extension services (mini branches, digital field applications) 3) Leveraging technology to collect and manage data (including scoring) and optimizing operating efficiency through new technologies including digital field applications. This will include a focus on how technologies can enable better data collection and management to understand clients more deeply and manage social performance objectives . 4) Leveraging other distribution networks and partnerships including; agent networks, ATM/POS, national switches, mobile money and others
- Appreciate the implementation lifecycle of delivery channel solutions and how this differs from traditional IT projects such as Core Banking Systems
- Understand available tools and identify effective processes for introducing and/or assessing existing technology projects within the business covering the full project lifecycle through to post go live monitoring.
- Recognize the need for a significant “mindset shift” to assess technology opportunities through a more rigorous business lens, based on analysis of the MFI’s strategic needs as well as how the technology will support the business. As part of this, the participants will need to recognize the attributes of an effective feasibility assessment and business case to guide the investment in new technology projects.
- Appreciate the types of skills and experience that ideally would be available on a board to input and monitor technology projects technology.
Navigating Competitive and Challenging Environments
Problem Statement: As MFIs and their operating environments transition from small-scale, marginal players to significant actors serving important numbers of clients and filling a key role in the financial system, MFIs face a variety of challenges: sharper regulatory and political scrutiny, intensified competition amongst themselves and from new entrants for clients and staffing, the risk of over-saturated markets or a loosening of credit discipline, and more demanding requirements for MIS and risk management. How can boards deliberately and strategically stay abreast of the dynamics of the changing operating environment and add value and oversight to management’s efforts to preserve and enhance the company’s competitive position? What tools and practices will help them navigate these challenges?
- Identify best practices in board-level strategic process to look forward and anticipate where the market will be rather than where it is or has been.
- Understand the characteristics of the stages of market cycles and ways to revisit and reconfirm the company’s strategic competitive positioning and niche.
- Recognize the impact of competition on clients and the bases of customer and staff satisfaction and loyalty.