The Investing in Inclusive Finance program at the Center for Financial Inclusion at Accion explores the practices of investors in inclusive finance. Across areas including risk, governance, stakeholder alignment, and fund management, this blog series highlights what’s being done to help the industry better utilize private capital to develop financial institutions that incorporate social aims.
You may have caught Philip Brown’s blog post last month on how MFI boards can be explicit about risk strategy and appetite. Philip’s post was one of 10 responses collected for the publication, in which industry experts each candidly responded to one tough risk question that every board member should be asking, and be able to answer. The publication, Ten Risk Questions for Every MFI Board, was officially released today.
Through the publication, we set out to cover topics such as over-indebtedness, risk management measures, fraud, “newer” risks, and lack of communication, offering insight on some of the most difficult risk issues that board members face. Ten Risk Questions for Every MFI Board provides concrete warning signs and strategies for effectively managing or avoiding specific risks. We hope this resource will empower board members to speak up when they are uncomfortable about a move the MFI is making, or when they think an early warning sign of a larger problem may be present.
The publication is part of the Center’s Running with Risk project, which seeks to raise awareness about and enable effective risk governance for the institutional growth and sustainability of MFIs. Running with Risk is creating a common framework and language around risk so both the MFI’s management and board of directors better understand the potential of their roles, and can more adequately anticipate and manage risks. In Ten Risk Questions for Every MFI Board, the various experts discuss the importance of boards in determining and assessing how much risk is acceptable for the MFI and taking responsibility in leading the institution to ensure that the proper policies, procedures, and people are in place.
Ten Risk Questions for Every MFI Board is available for download on the CFI website. Along with Philip Brown, the publication includes responses from risk experts Lynn Exton, Karla Brom, Alex Silva, Liliana Botero, Daniel Rozas, Petronella Chigara-Dhitima, Stephan Hartenstein, Andrés Calderon, and Christian Ruehmer.
Have you read?
How Can MFI Boards Be Explicit about Risk Strategy and Appetite
A Core Reference Tool Updated: CMEF’s Governance Guidelines
Banana Skins 2012: Overindebtedness Tops the Risk Charts