Risk Management Solutions



Risk Management Solutions for Social Enterprises

Optima Risk Consulting risk management solutions enable microfinance institutions and social enterprises to grow while staying true to their social objectives. In addition, implementing risk management solutions will ensure the financial viability of your organization, minimize adverse shocks to your business’ bottom line, and allow your business to maintain its current funding sources.

Through interviews with key stakeholders, review of governance documents and on-site visits, Optima Risk Consulting can identify, assess, and provide concrete strategies to mitigate, transfer or eliminate the key risks facing your organization. We can provide you with a detailed risk assessment as well as concrete recommendations for strengthening the risk management of your organization. We can focus specifically on one type of risk or look more generally at all types of risks (operational, financial, reputation, strategic, etc.).

Risk Management Solutions For Microfinance Institutions

More specifically for microfinance institutions, Optima Risk Consulting can provide expert advice and solutions in the following areas:

1) Credit risk management: providing tools for measuring, monitoring and managing repayment rates and default rates, such as:

  • Developing a credit scoring system;
  • Strengthening the borrower screening process;
  • Determining limits on the portfolio diversification;
  • Calculating provision for credit losses; and
  • Implementing statistical analysis to track the evolution of the portfolio over time.

2) Liquidity risk management: providing tools for measuring and monitoring the mismatch between assets and liabilities, such as cash flow analysis, as well as funding and investment strategies addressing the mismatch to ensure short and long-term obligations are met, projected growth is funded and a contingency reserve is in place.

3) Reputation risk management: conducting impact studies to help determine the profile of clients being positively and negatively impacted by the microloans and to allow the institution to better align its stated social goals with its practice by making product and client selection changes.

4) Consumer over-indebtedness management: providing strategies for managing the increasing over-indebtedness of clients and its impact on the credit risk of the portfolio and on the reputation risk of the organization while balancing its growth objectives, such as:

  • Reducing the allocation of the portfolio to problematic geographic regions or sectors of economic activities;
  • Explicitly accounting for other loans in its borrowing screening process and provisional policies;
  • Improving the financial education of its clients; and
  • Incorporating strong governance policies.

Optima Risk Consulting can provide these services through independent consulting mandates, or through participation in risk management committees where it can offer continuous guidance and support for the measurement, monitoring and management of the key risks of your organization.