Strengthening risk management

Against the background of the recent institutional challenges highlighted in the financial crisis, the Development Facility of the European Fund for Southeast Europe has increased its activities in various fields related to risk management.

Several partner lending institutions of the EFSE, especially microfinance institutions, are supported in building up capacities in credit risk and delinquency management. Hands-on, tailor-made technical assistance implemented in intermittent missions of the consultants of the EFSE Development Facility, helped the partner lending institutions to improve their internal structures and processes. Consultants helped introduce delinquency task forces and arrears committees, trained staff, or provided coaching to middle and top management. Where necessary, the EFSE Development Facility also supports financial institutions in reviewing their overall risk management approach and systems, including operational risk, credit risk and market risk.

A sector-wide workshop – organised for all microfinance institutions in Bosnia and Herzegovina in early 2009 – provided a platform to discuss the challenges that came with the financial crisis and how to address them. Research projects exploring the consequences of the financial crisis and the risk of over-indebtedness among the EFSE final target group provided valuable input for discussions about the way forward.