Microfinance is fast becoming a household name globally due to its acceptance as a

means of reaching those that were not served by the conventional big banks. The
survival of microfinance institutions in any country depends majorly on the overall
political and economic environment of such a nation. However, the greatest
challenge the microfinance institutions will face globally in pursuance of its
financial intermediary role is how best to manage its credit and risk exposures in
comparison with the rising competition, sophistication and turbulent economic and
social environment especially in developing nations. After examining different
concept of microfinance and risk management, this paper focus on those peculiar
risks associated with microfinance business and suggested how regulators and
operators in the sector can best guide against distress or imminent collapse while
striking a balance between profitability and unhealthy risk exposure.

Risk Management in Microfinance Institutions

Onafowokan Onabanjo Oluyombo, Pan-Atlantic University Olabisi Jayeola, University of Agriculture,
Abeokuta
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Risk in Microfinance

Microfinance institutions provide financial services, such as loans, to low-income

clients, including micro-companies and the self-employed, who traditionally lack
access to finance.
These transactions are typically of smaller amounts and shorter tenure than
corporate loans and target small business owners or commercial clients whose
operations are generally small.
The environmental and social risks associated with microfinance are typically low
partly due to the small size of the operation and the industry sector. However, in
some cases clients may be involved with handling dangerous substances such as
pesticides that can pose health or environmental risks, but frequently they lack the
necessary environmental and social management capacity to do so safely.
Although at the individual transaction level the environmental and social risks
associated with microfinance are low, given the smaller size and shorter tenure of
transactions, there are credit or liability risks for the microfinance institution in
cases where environmental and social issues, such as an accident, affect a micro-
entrepreneur’s ability to repay a loan. Microfinance institutions often consider the
environmental and social impacts associated with their transactions in the context of
the developmental role they play in their communities and are therefore concerned
with reputational risks. In addition, many see the promotion of good environmental
and social practices as part of their role in the community.
========================================================
The main risk it faces resides obviously in its main activity which is granting loans or credits.
However with the rapid growth and expansion of the sector today, microfinance institutions
face many other risks and as a matter of fact must identify and anticipate potential risks to avoid
unexpected losses and surprises.
==========================================================================================

Documenting the risk management process has become less frustrating today, with the use of
the risk management template. This preformatted tool was designed to help reduce the time
required for this important document. Because the path to follow, along with the sections
required, in this document are already set, the project manager can then concentrate on the
details of the process.

The biggest challenge to properly documenting the risk management process is the inclusion of
all the possible risks your business venture could encounter. There are general risks that are
well known in the business world, but each business sector also has its own sets of risks to
worry about. On top of that, each region of the world will again have a different set of risks
from other parts of the nation. Each and all of the risks must be listed in this document for it to
truly be effective.

The documenting of the risk management process is essential for the project manager that wants
to be prepared for any possible problem their business venture might encounter. The risks
generally are impacted during the execution phase of a project’s life cycle, so preparation and
plans must be made before you begin production of your deliverable.

===============================================================

One of the key requirements of the board is to gain assurance that risk management processes
are working effectively and that key risks are being managed to an acceptable level. The
starting point and most foundational step in this assurance will be the existing risk management
document inventory. This inventory will clearly outline the organization’s current commitment
and attitude towards risk. Well-written documentation will be evidence reflecting the
organization’s evolution in risk management.

============================================================

The project manager of any firm is responsible for a risk management plan. The plan will assist
in foreseeing risks and estimating effectiveness of the processes with best practices. The plan
must also encompass plans for mitigation of risks and provide a risk assessment format.

Risks are uncertain events and conditions which occur at any time. They can have both positive
and/or negative consequences for any project if best practices are not implemented. This is why
there is a lot of pressure on project managers to ensure that there is always a plan for anticipated
and unforeseen risks. The plan must serve as a buffer to control the losses resulting from the
consequences. A risk management action plan must be reviewed periodically to ensure that the
project team is ready to handle all likely outcomes. This is an important best practice which
project managers must implement.

The basis of any risk management plan is to include a risk strategy into the processes of any
organization. Risk assessment is a necessary best practice in order to have a risk management
action plan. There are four potential strategies which can be adopted for best practice in the risk
management action plan.
Copyright 2019 Best-Practice.com. All Rights Reserved.

=================================================================

Risk action plan

Posted by Phill Forostenko in Dec, 2014

A plan is created to ensure that the right actions are carried out in a timely manner. A plan also provides a go-to
guide, in case the “unexpected” happens.

A risk action plan prepares you to set off on a business adventure by helping you to put some contingency
strategies in to place.

What is the purpose of a Risk action plan?

A risk action plan helps to prepare you to face potential risks which may occur as part of a business scenario
and helps you to tackle any problems with may occur. A risk action plan will provide you with strategies which
are appropriate dependent on the levels of risk which your organisation faces.
What’s involved with developing a Risk action plan?

In order to develop an appropriate risk action plan, risks must first be identified and evaluated. When
developing a plan, an organisation must consider the probability of a risk occurring, and the potential costs to
the company if that risk does occur. When developing a risk action plan, those involved with creating the
strategies must carefully consider whether the costs incurred in preventing the risk from occurring would be less
than the costs incurred if it did occur. If the cost of prevention is higher, then the organization may want to take
their chances.

Where does a Risk action plan fit into the risk management
process?

Creating a risk action plan comes at the middle of the risk management process, between evaluation of risks and
before the monitoring process.

How does a Risk action plan impact on managing

organisational risk?

A risk management plan will identify measures which should be taken across the whole organisational structure
to try to reduce risk. If the measures are followed correctly, they should have a very positive impact on the
reduction of risk.

What terms are used in a Risk action plan?

Risk – A problem which may or may not occur.

Plan – The steps which should be taken to reduce or remove the risk.
Reduce – A step which is taken to decrease the likelihood of a risk occurring, or to lessen the costs to an
organisation if that risk does ultimately occur.
Remove – A step which is taken to prevent the risk from occurring.

=========================================================

MIND TOOLS.COM

Action Plans are simple lists of all of the tasks that you need to finish to meet an objective.
They differ from To-Do Lists in that they focus on the achievement of a single goal.
Action Plans are useful, because they give you a framework for thinking about how you'll
complete a project efficiently. They help you finish activities in a sensible order, and they
help you ensure that you don't miss any key steps. Also, because you can see each task
laid out, you can quickly decide which tasks you'll delegate or outsource, and which tasks
you may be able to ignore.

==========================================================
How to Make an Action Plan (Example Included)
By Jennifer Bridges | Nov 22, 2019

What Is an Action Plan?

What is an action plan? Generally, it’s a proposed strategy or course or action. Specifically, in
project management, it’s a document that lists the steps needed to achieve a goal. That is, an action
plan clarifies what resources you’ll need to reach that goal, makes a timeline for the tasks to get to
that goal and determines what team members you’ll need to do it all.
An action plan is a document that documents the project. That is, it is a detailed list of the work that
must be done to complete the goal of the project. It outlines what resources you’ll need to achieve
that objective and what your timeline will be, including the tasks that are involved in getting from
the start of the project to the finish.
==========================================================
Implementing action plans
BY AUSTRALIAN RETAILERS ASSOCIATION 15 November 2018
The implementation of Action Plans is a key outcome of the strategic planning
process. Without implementation, strategic planning is an interesting exercise that
leads nowhere. Major issues relating to the implementation of Action Plans are
=================================================================

Implementation:

Monitoring implementation asks the fourth key question "What happens when we do?"

Implementation is the stage where all the planned activities are put into action. Before the
implementation of a project, the implementors (spearheaded by the project committee or
executive) should identify their strength and weaknesses (internal forces), opportunities and
threats (external forces).

The strength and opportunities are positive forces that should be exploited to efficiently
implement a project. The weaknesses and threats are hindrances that can hamper project
implementation. The implementors should ensure that they devise means of overcoming them.
Monitoring is important at this implementation phase to ensure that the project is implemented
as per the schedule. This is a continuous process that should be put in place before project
implementation starts.

As such, the monitoring activities should appear on the work plan and should involve all stake
holders. If activities are not going on well, arrangements should be made to identify the
problem so that they can be corrected.

Monitoring is also important to ensure that activities are implemented as planned. This helps the
implementors to measure how well they are achieving their targets. This is based on the
understanding that the process through which a project is implemented has a lot of effect on its
use, operation and maintenance.

When implementation of the project is not on target, there is a need for the project managers to
ask themselves and answer the question, "How best do we get there?"

Summary of the Relationship:

----------------------------------------------------------------------------------------------------------------

The above illustrates the close relationship between monitoring, planning and implementation.

It demonstrates that:

Planning describes ways which implementation and monitoring should be done;

Implementation and monitoring are guided by the project work plan; and

Monitoring provides information for project planning and implementation.

----------------------------------------------------------------------------------------------------------
MSG – Management Study Guide - ISO 9001:2015 Certified Education Provider

Evaluation of a Risk Management Plan

Critical evaluation of a risk management plan at every stage is very necessary especially at an
early stage. It will allow companies to discover the flaws before it gets into the action. Once
you’re through the process, you can address the issues and then introduce it.

Evaluating a risk management plan sometimes can be very frustrating. It is definitely a time
consuming process and also requires more of human efforts. Therefore, it is always better to
analyze and evaluate a plan at every stage otherwise it will result in wastage of time, finances
and efforts. In order to keep a check on it, specialized teams of risk managers can be appointed.
The whole event can be outsourced to a risk management firm. The professionals at the firm can
help you design, develop, implement and evaluate a risk management plan for your company.
===============================================================

How to Monitor the Effectiveness of Control Measures

Posted by Tyler Britton on Feb 27, 2017 6:08:00 AM

Control measures are the heart of your safety management system’s risk mitigation efforts.

This method is used to monitor the effectiveness of control measures through common interactions with
the safety management system:

In short, issue management forces safety management to look directly at pertinent safety controls to
evaluate whether or not they worked as desired. This is a natural way to monitor control measures
whenever safety issues are reported.

====================================================== ===================

Risk evaluation and control involves the process of identifying, prioritising and managing the
risks that an organisation faces. Cambridge Risk Solutions can assist with each stage of this
process, bringing the benefit of an objective viewpoint and years of experience

=============================================================
Given the increasingly complex business environment, political risks should not be ignored by ICEs
when they approach global markets [2, 6, 7]. Political risk in international construction projects refers
to uncertainty related to political events (e.g., political violence, regime changes, coups, revolutions,
breaches of contract, terrorist attacks, and wars) and to arbitrary or discriminatory actions (e.g.,
expropriation, unfair compensation, foreign exchange restrictions, unlawful interference, capital
restrictions, corruption, and labor restrictions) by host governments or political groups that may have
negative impacts on ICEs [6]. Compared with the nonsystematic risks (e.g., technical risk, quality risk,
procurement risk, and financial risk) of construction projects, political risk is more complex,
unpredictable, and devastating and is usually outside the scope of normal project activities [2].
Much of the extant literature has focused on political risks in international general business [8, 9] but
has paid less attention to political risks in international construction projects. In most cases, political
risk management is practiced only as a part of risk management at the project level in construction
projects. However, project-level political risks can also affect enterprises’ objectives (e.g., financial,
reputation, stability, survival, development, and strategic decisions) [10]. Implementation of political
risk management only at the project level has some drawbacks: (1) lack of a comprehensive
understanding of political risks; (2) overemphasis on short-term project goals and less consideration of
corporate strategic objectives; (3) constraints because of limited resources or inappropriate resource
allocation among projects; and (4) lack of accumulation and sharing of risk management experience.
Therefore, risk management only at the project level no longer seems to be sufficient to help ICEs to
address political risks in the global market [11].
Hence, political risk management in international construction projects should be conducted jointly at
both the project and firm levels by considering the various types of risk and linking risk management
strategies to the enterprise’s objectives. Successful political risk management should be based on
sufficient resources and information as important components of the decision-making process are
continually improved and enhanced [12]. At the firm level, political risks can be treated as part of the
entire risk portfolio of an enterprise and can be addressed across multiple business areas [13, 14].
Implementation of political risk management at the firm level can lead to better coordination and
consolidation of the resources and goals of the enterprise, which is more conducive to the long-term
stability and development of ICEs [15].
This study focuses on the political risk inherent in international construction projects and aims at
identifying the strategies available for ICEs to manage political risk. The specific objectives of this
study are to (1) identify possible risk management strategies that can address political risks in
international construction projects, (2) evaluate the importance of the strategies, and (3) explore the
interrelationships among those strategies and their practical applications in international construction
projects.
Because less attention has been devoted to political risk management in international construction
projects, this paper can enrich the understanding of risk management in the field of international
construction. Furthermore, this study may help practitioners clearly understand political risk
management strategies in international construction projects and provide guidance for ICEs regarding
how to address political risk when venturing outside their home countries.
Advances in Civil Engineering
Volume 2018, Article ID 1016384, 11 pages
https://doi.org/10.1155/2018/1016384
Research Article

Identifying Political Risk Management Strategies in International Construction

Projects
Tengyuan Chang,1 Bon-Gang Hwang,2 Xiaopeng Deng,1 and Xianbo Zhao3
===============================================================

Economic Risk—What Is It and How to

Effectively Manage It
Economic risk centers on macroeconomic circumstances that may result in significant loss for a business. These
conditions include inflation, exchange rates, new government regulations and other decisions that may
adversely affect profits.
When it comes to global supply chains risks, economic risk is particularly challenging to anticipate and predict.
Without an economic risk management strategy, you put your business, its current profitability and its potential
growth at risk.
For the most effective economic risk management strategy, you must first understand the variety of economic
threats to your business.

Common Types of Economic Risk

There are many types of economic risk that businesses need to identify and manage to best defend against
global supply chain risks.
 1. Interest rates. As with any loan, increasing interest rates can lead to reduced profits. Researching the interest
rate environment of a country is a crucial step for comprehensive economic risk management.

2. Minimum Wage. If minimum wage is increased, the cost of production is increased. Often, labor costs can
increase but market price remains stable, leading to decreased profits.

3. Market Prices. A country’s economy greatly influences market prices. When market prices decrease but
production costs stay the same, profitability can be significantly reduced.

4. Taxes. New types of taxes can threaten a business’ profits. When a government introduces new taxes, it can
negatively impact a business’ financial performance.

5. Duty Rates. Similar to taxes, an increase on import/export duties can decrease profitability.

6. The Cost of Materials. An increased cost of materials is one of the economic risk factors that manufacturing
businesses need to identify and manage. When the market is competitive and these costs increase, consumers
still expect to pay the consistent prices, leading to a possible loss in profits.

Other common types of economic risk to be aware of include exchange rates, hyperinflation and general
government regulations that can affect investments. Businesses need to proactively identify and monitor all
these conditions to support a robust economic risk management strategy.

==================================================================

Social Risk Management: The World Bank’s Approach to Social Protection in a

Globalizing World
Robert Holzmann, Lynne Sherburne-Benz, and Emil Tesliuc Social Protection
Department The World Bank Washington, D.C. May 2003

Social Protection, broadly understood as public measures to provide income

security to the population,
it is now increasingly understood that assisting individuals, households and
communities in dealing with diverse risks is needed for accelerated poverty
reduction and sustained economic and human development.

===================================
https://www.diw.de/documents/dokumentenarchiv/17/42453/Konzept.pdf
The basic idea of SRM is that all individuals are exposed to multiple risks from different sources, whether they are
natural (such as earthquakes, flooding and illness) or man-made (such as unemployment, environmental degradation,
war and terror).

SRM consists of public interventions to assist individuals, households, and communities better manage risk, and to
provide support to the critically poor (Holzmann, Jorgensen 2000).

SRM also encompass macroeconomic policies to reduce the exposure to economic shocks such as sudden oil price hikes
and unpredictable moves in currency exchange rates.

===========================================================================================

https://www.berkmansolutions.com/risk/6-steps-to-legal-risk-management

Risk management is the frontier for lawyers, compliance officers, and contract
managers to add value to their organizations. A pragmatic approach to legal risk
management is within reach!

================================================
https://en.kromannreumert.com/Insights/2017/Legal-risk-management

Most companies undertake at least some degree of legal risk management every day, via
inhouse lawyers or consulting with external legal advisers. But as day-to-day tasks and
urgencies pile up, it is all too easy to lose sight of the greater picture and the mutually-
affecting risks across contracts, departments, and subsidiaries.

Legal risk management seeks to uncover these "hidden" risks, including those mutually
affecting or mutually accumulating risks that could potentially evolve into a 'perfect
storm', even if each of those risks individually might have been manageable if only it had
been identified sooner.

The objective of a legal risk management process is to map the legal risks facing your
company. It will also tell you in what way or to what extent those risks interact, potentially
building into a mutually accumulating risk, sometimes referred to as the ‘snowball effect’.

Whatever the size of a company, the legal risks can vary greatly from section to section,
organisation to organisation, etc. Subsidiaries, sections, and employees each have their
respective responsibilities, projects, businesses, and authorisations.

If they launch initiatives independently that are mutually conflicting or which, when
combined, serve to expose the company to risks, problems can arise sooner than you know
it.
Risks may also come about as a result of changes to laws and regulations, outdated
routines and procedures, or because the company’s growth or development has caused it
to move into other risk zones.

To help survey your legal risks, Kromann Reumert has developed a building-block-style
process that does just that:

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But today technological risk is one of the major risks facing asset managers. Among these
changes cybercrime is the most common. Cybercrime is defined when computer is the object of
crime.

This can be viewed in terms of hacking, phishing or spamming.

Most cybercrimes use computer technology to access personal information, business trade. Use
of internet for malicious or exploitative purpose can be classified as cybercrimes (Chorafas,
2011). Normally computer crimes are very catastrophic and costly to the entity. According to a
research carried in UK, the rate of cybercrimes is on the rise. Many firms are losing millions of
sterling pounds on these malicious acts. Asset managers are not exemption and are vulnerable
too. The dynamics of risk management have changed to keep vigil of this criminal acts carried
out by hackers. Some of the common changes are use of cyber security to curb this
technological risk (Chorafas, 2011).

The nature of business managers requires the need to hold and manage rapidly increasing
volumes of data. This data comprise clients’ information, the market data, the asset portfolio
and numerous bank account transactions. These require a complex data management strategy
that may be outsourced or at times managed by the firm. This has in turn increased the risk
management spectrum to the asset managers. Data is normally an easy target by cyber
criminals.

Though cloud computing has made it easy to access data from the server with much ease. Risk
management is highly boosted by the ability to identify this risk due to availability of data
(Chorafas, 2011). More so, monitoring of these data is becoming more efficient hence much
more informed decisions are made. Thus the process of risk management has lowered the time
schedule and cost. Cloud computing can be described as a model in which computing resources
are abstracted from their underlying physical hardware elements.

The act of virtualization services provide scalable, on-demand access to a pool of computing
resources typically accessed 7 over the Internet. The importance of cloud computing includes
scalability, agility and speed-tomarket, and cost control which is the main aim of risk
management. Therefore technology enhances risk management process (IBM, 2011).

===========================================
TECHNOLOGY RISK MANAGEMENT
https://riskandcompliancemagazine.com/technology-risk-management

The modern business world marches to the beat of technology’s drum, and has done so for
many years. As the internet and email matured in the 1990s, companies began to adapt and take
up the technology. With the advent of high speed broadband in the 2000s, companies again
further embraced the burgeoning tech, taking it to the heart of their operations. This has
continued into the current decade where smartphones and tablet computers are ubiquitous, and
Big Data plays a pivotal role in the day to day operations of many firms. Furthermore, for
financial institutions the coming of online card payments, advancements in mobile technology
and contactless payments have helped diversify their business offerings and their customer
reach.

IT outsourcing has also become an attractive proposition for companies and financial
institutions. With cheaper and more plentiful labour available in many emerging markets, and
with the necessary technological capabilities, institutions have found fewer roadblocks to
outsourcing many of their services internationally.

Clearly, technology has changed the way we do business. It has helped to globalise the
economy and impacted irrevocably on everyday life at home. Financial institutions have come
to rely on technology to help support their business processes and handle massive amounts of
critical data. Given the importance of technology and the impact that it has on corporates, it is
vital that organisations place technology risk management at the top of the corporate agenda.
Despite the positive implications of embracing technological advancement, the decision to
infuse businesses and our working life with technology is not without its risks.
With cyber criminality and data privacy breaches on the up – indeed, seemingly not a week
goes by without reference to a breach somewhere, be it a retailer or government agency – the
time for companies to factor technology into their wider risk management strategies has now
surely come. Companies today are more reliant on complex IT systems, and for financial
institutions, the risk of cyber attack and system disruption is comparatively high. Cyber
breaches can negatively impact shareholder value, tarnish the brand and expose companies to
expensive, lengthy and embarrassing litigation.

BIBLIOGRAPHY

1. Oluyombo, O. O. and Olabisi, J. B. (2008) “Risk Management in Microfinance Institutions”. Journal of

Applied Economics, Vol. 1 No. 1, pp 104-112.

2. Nimal A. Fernando. “Managing Microfinance Risks: Some Observations and Suggestions” Asian
Development Bank, Philippines Email: nfernando@adb.org

3. John Thackeray in his article “Why It’s Important to Document the Needs of Risk Management” found in
FEI Daily issued on June 6, 2018

4. Phill Forostenko (2014). Risk action plan. Dec, 2014

5. Bridges Jennifer (2019). How to Make an Action Plan (Example Included) Nov 22, 2019.

6. Mind Tool .com

7. Britton, Tyler (2017). “How to Monitor the Effectiveness of Control Measures” Feb. 27, 2017
8. John Christy (2019). “Understanding and Managing Political Risk”. October 28, 2019

9. Daniel Wagner (2000). “The Impact of Political Change and How to Protect your Business Against It”.
April 2000
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