Risk Management Practices in Indian Microfinance Sector

2018 ◽  
pp. 1-29
Author(s):  
Ashish Kumar Sana ◽  
Bappaditya Biswas
Keyword(s):  
Risk Management ◽  
Financial Management ◽  
Financial Stability ◽  
Management Practices ◽  
West Bengal ◽  
Microfinance Institutions ◽  
Management Tools ◽  
Operational Risks ◽  
Tools And Techniques ◽  
Structured Questionnaire

Microfinance institutions (MFIs) are exposed to a great number of risks such as institutional risks, operational risks, financial management risks, and external risks that threaten effective services to clients, financial stability, and future sustainability. In this background, the objectives of the chapter are (1) to understand the concept risk and risk management of MFIs and (2) to examine the risk management practices of select MFIs in West Bengal. Based on the objectives, a structured questionnaire has been prepared to examine risk management practices of MFIs and problems associated with implementing risk management tools and techniques. The study found that most of the MFIs have not adopted risk management tools and techniques so far in their institutions to minimize risks. The study also found that the small MFIs are lacking qualified and professional persons in management and hence facing more strategic and governance risks.

scholarly journals The Interplay of Risk Management and Uncertainty: A Project Management Practice Perspective.

2009 ◽  
pp. 74-84
Author(s):  
Claude Besner ◽  
Brian Hobbs
Keyword(s):  
Risk Management ◽  
Project Management ◽  
Management Practices ◽  
Management Practice ◽  
Management Approach ◽  
General Tendency ◽  
Management Tools ◽  
Empirical Perspective ◽  
Contextual Variability ◽  
Tools And Techniques

THE PAPER EMPIRICALLY MEASURES THE INTERPLAY BETWEEN RISK MANAGEMENT AND UNCERTAINTY AND THE CONTEXTUAL VARIABILITY OF RISK MANAGEMENT PRACTICE. THE RESEARCH FIRST CLARIFIES THE CONCEPTS OF UNCERTAINTY, RISK AND RISK MANAGEMENT. THE RESEARCH DEFINES RISK MANAGEMENT FROM AN EMPIRICAL PERSPECTIVE I.E., FROM AN EMPIRICALLY IDENTIFIED SET OF TOOLS THAT IS ACTUALLY USED TO PERFORM RISK MANAGEMENT. THIS TOOLSET IS DERIVED FROM THE RESULTS OF AN ONGOING MAJOR WORLDWIDE SURVEY ON WHAT EXPERIENCED PRACTITIONERS ACTUALLY DO TO MANAGE THEIR PROJECTS. THIS PAPER USES A SAMPLE OF 1,296 RESPONSES FOR WHICH THE INTERPLAY BETWEEN RISK MANAGEMENT AND UNCERTAINTY COULD BE MEASURED. The results are very coherent. They verify and empirically validate many of the propositions drawn from a review of the literature. But results challenge some of the propositions found in the conventional project management literature and some commonly held views. The research shows that the use of risk management practices and tools is negatively related to the degree of project uncertainty. This somewhat counter-intuitive result is consistent with a general tendency for all project management tools and techniques to be used more intensively in better defined contexts. The dominant project management paradigm is oriented towards reducing or controlling uncertainty, but is less well adapted to unforeseeable events and high levels of uncertainty. A better understanding of the reality of the actual practice leads to a discussion about supplementing the current paradigm with new approaches to manage the uncertainty that cannot be removed or reduced by the conventional project management approach.

Factors influencing Midwestern grain farmers’ use of risk management tools

2019 ◽  
Vol 79 (2) ◽  
pp. 192-203
Author(s):  
Brian K. Coffey ◽  
Ted C. Schroeder
Keyword(s):  
Risk Management ◽  
Management Practices ◽  
Mail Survey ◽  
Management Tool ◽  
Farm Size ◽  
Management Tools ◽  
Content Type ◽  
Multinomial Logit Regression ◽  
Decision Choices ◽  
Grain Farmers

PurposeThe purpose of this paper is to identify the relationships between grain farm and farmer profiles and their respective choices to use forward pricing techniques and revenue protection crop insurance to manage risk.Design/methodology/approachAn e-mail survey of Midwestern grain farmers elicited farmer demographic information, farm profile, risk attitudes and farmer use of forward pricing and revenue protection insurance. Responses regarding use of risk management tools were compiled as choices to use possible bundles of tools to account for simultaneous nature of the decision. Choices to use bundles of tools were used as the independent variable categories in a multinomial logit regression. Regressors were relevant data collected from the survey.FindingsFarm size, using a market advisory service, and being a technology adopter are the most important factors in predicting risk management tool use by grain farmers. Farmers tend to use forward pricing and revenue protection insurance in combination. Large farms are more likely to use forward pricing tools.Practical implicationsResults provide researchers, extension professionals and risk management specialists with a current understanding of how farm and farmer characteristics relate to use of risk management tools. The authors also elaborate on findings to provide guidance for future risk management research.Originality/valueThe survey covered 9 Midwestern states and 648 grain farmers. The survey results update understanding of grain farmers’ risk management practices. The empirical approach treats risk management decisions to use available tools as simultaneous, which recent literature suggests is more appropriate than earlier approaches.

scholarly journals BUSINESS RISK MANAGEMENT PRACTICES ADOPTED BY ENTREPRENEURS FOR BUSINESS SUCCESS IN DELTA STATE

2021 ◽  
pp. 1-7
Author(s):  
Samuel Ikelegbe ◽  
Romanus Udeh
Keyword(s):  
Risk Management ◽  
State Government ◽  
Management Practices ◽  
Management Practice ◽  
Business Management ◽  
Business Owners ◽  
Business Success ◽  
Business Risk ◽  
Level Of Significance ◽  
Structured Questionnaire

The study was a survey research; it focused on determining the extent entrepreneurs adopt risk management practices for business management practice in Delta State. The population of the study comprises of 860 business owners who are registered with the Ministry of Commerce and Industries in Delta State. The instrument for data collection was a structured questionnaire with 16 items. Data collected were analyzed using mean and Standard deviation. The null hypothesis was tested using ANOVA statistics at 0.05 level of significance. Findings from the investigation revealed that entrepreneurs in Delta State do not adopt business risk management practices in managing their businesses. It was recommended among others that the Delta State Government and Ministry of Commerce and Industries should sensitize business owners on business risk management practice to enhance business success.

scholarly journals Mechanisms of Protection from Interest Rate Risk with Reference to the Life Insurance Market in Montenegro

2018 ◽  
Vol 7 (1) ◽  
pp. 17-42
Author(s):  
Milijana Novović Burić ◽  
Vladimir Kašćelan ◽  
Milivoje Radović ◽  
Ana Lalević Filipović
Keyword(s):  
Risk Management ◽  
Interest Rate ◽  
Life Insurance ◽  
Financial Management ◽  
Financial Stability ◽  
Interest Rate Risk ◽  
Economic Security ◽  
Insurance Market ◽  
Insurance Companies ◽  
Rate Risk

Abstract Insurance companies are facing major challenges that point to the need for control process and risk management. Risk management in insurance has a direct impact on solvency, economic security, and overall financial stability of insurance companies. It is very important for insurance companies to adequately calculate risks to which they are exposed. Asset liability management (ALM), as an integrated approach to financial management, requires simultaneous decision-making about categories and values of assets and liabilities in order to establish the optimum volume and the ratio of assets and liabilities, with the understanding of complexity of the financial market in which financial institutions operate. ALM focuses on a significant number of risks, whereby the emphasis in this paper will be on interest rate risk which indicates potential losses that may reflect in a lower interest margin, a lower value of assets or both, in terms of changes in interest rates. In the above context, the aim of this paper is to show how to protect from interest rate changes and how these changes influence the insurance market in Montenegro, both from the theoretical and the practical point of view. The authors consider this to be an interesting and very important topic, especially because the life insurance market in Montenegro is underdeveloped and subject to fluctuations. Also, taking into account the fact that Montenegro is a country that has been making serious efforts to join the EU, it is expected that insurance companies in Montenegro will strengthen their financial position in the market even using the ALM traditional techniques, which is shown in this paper.

Management Accounting And Risk Management Practices In Financial Institutions

2012 ◽  
Author(s):  
Siti Zaleha Abdul Rasid ◽  
Abdul Rahim Abdul Rahman
Keyword(s):  
Risk Management ◽  
Financial Institutions ◽  
Management Practices ◽  
Management Accounting ◽  
Enterprise Risk Management ◽  
Chief Financial Officers ◽  
Operational Risks ◽  
Enterprise Risk ◽  
Budgetary Control ◽  
Contemporary Management

Tujuan kertas kerja ini adalah untuk melaporkan hasil kajian terhadap amalan perakaunan pengurusan dan amalan pengurusan risiko di institusi kewangan. Data dikutip menggunakan borang soal selidik yang dihantar kepada 106 institusi kewangan yang tersenarai di dalam website Bank Negara Malaysia, di mana Ketua Pegawai Kewangan atau pegawai terkanan di jabatan kewangan institusi–institusi tersebut dilantik sebagai responden kajian. Analisis amalan perakaunan pengurusan berdasarkan kerangka IFAC (1998) menunjukkan bahawa amalan yang lazim diguna pakai adalah amalan di peringkat pertama, diikuti dengan amalan selepas era 1995. Dapatan ini menunjukkan bahawa amalan perakaunan pengurusan tradisional masih diguna pakai secara meluas oleh institutsi-institusi kewangan di Malaysia walapun amalan–amalan kontemporari (peringkat ke 4 dan ke atas) telah diperkenalkan. Bagi amalan pengurusan risiko, kebanyakan institusi telah melaksanakan kerangka Enterprise Risk Management (ERM) secara menyeluruh atau sebahagian. Amalan perakaunan pengurusan berkaitan penyata kewangan dan analisis nisbah dianggap sebagai memberikan sumbangan utama kepada pengurusan risiko. Kawalan belanjawan, belanjawan dan pengurusan strategik juga dianggap penting dalam pengurusan risiko operasi. Kata kunci: Perakaunan pengurusan; pengurusan risiko; institusi kewangan The aim of this paper is to report the results of a study on management accounting and risk management practices in financial institutions. The research method involved administering a questionnaire to 106 financial institutions listed on the Malaysian Central Bank’s website and the respondents were the chief financial officers (CFO) or the most senior positions in the finance department of the institutions. Based on the IFAC’s (1998) framework, it was found that the most widely practiced were the management accounting practices at Stage 1, followed by practices of Post 1995. This finding shows that despite the emergence of contemporary management accounting practices (Stage 4 onwards), traditional management accounting that focuses on financial performance and budgetary control is still widely practiced by financial institutions in Malaysia. As for the risk management practices, most of the firms have either implemented a complete or partial Enterprise Risk Management (ERM) framework. The findings from the survey showed that management accounting practices related to financial statement and ratio analysis were perceived to contribute most towards risk management. Budgetary control, budgeting and strategic planning were also perceived to be important in managing operational risks. Key words: Management accounting; risk management; financial institutions

Issue of Financial Management Practices among SMMEs: A Case Study of Former Transkei Homelands in Eastern Cape Province South Africa

10.31355/70 ◽  
2020 ◽  
Vol 4 ◽  
pp. 001-007
Keyword(s):  
South Africa ◽  
Financial Management ◽  
Financial Stability ◽  
Management Practices ◽  
Future Research ◽  
First Year ◽  
Eastern Cape Province ◽  
Eastern Cape ◽  
Management Skills

NOTE: THIS ARTICLE WAS PUBLISHED WITH THE INFORMING SCIENCE INSTITUTE. Aim/Purpose...................................................................................................................................................................................................... The goal of this study was to investigate the financial management practices of SMMEs operating in under developed regions as a challenge facing SMMEs operating in underdeveloped regions using former Transkei Homelands in Eastern Cape Province as a case study. Background......................................................................................................................................................................................................... In South Africa, the works of Cameron and Miller (2008) highlights that South Africa is ranked among top countries in the world with high failure rates of SMMEs during the first year of establishment. This calls for continues research works to identify factors that could be impeding the progress of SMMEs in South Africa. According to Jayansankaran, (1999) proper financial management practices are among the key deciding factors when it comes to the survival of SMMEs. Mostly SMMEs in underdeveloped regions are owned and managed by one person, the lack of financial management competence on the side of the SMMEs owners or managers in turn could bring serious consequences to the financial stability and grow of the SMMEs. It is against this background that this study focuses on financial management practices among SMMEs entrepreneurs operating their businesses in former Transkei Homelands where survival of SMMEs are critical for economic development of the region. Methodology....................................................................................................................................................................................................... The researcher in this study uses both quantitative and purposive sampling approaches to design an exploratory study to sample 68 SMMEs owners/managers based in the various towns of the selected region. Contribution........................................................................................................................................................................................................ This research will add to the growing knowledge about identifying factors that may be impeding survival of SMMEs. Findings .............................................................................................................................................................................................................. The major findings of the study revealed that 95.59% of the owners/managers have no financial management/accounting skills as well as 58.82% of the internal system of recording financial transactions are not audited. Recommendations for Practitioners................................................................................................................................................................. In view of the findings it is recommended that agencies charged with looking after SMMEs provide training in the area of financial management skills for the SMMEs owners/managers. Recommendation for Researchers.................................................................................................................................................................... Future studies can include the other four principles of financial management principles highlighted by Armstrong (2001). Impact on Society............................................................................................................................................................................................... The research will assist to highlight to funders of SMMEs, policy makers and business support agencies the need for educating SMMEs entrepreneurs especially those operating their businesses in underdeveloped regions in proper financial management practices in order to curve the problem of cash flow faced by SMMEs which leads to SMMEs failure. Future Research................................................................................................................................................................................................. Exploring the skills of the SMMEs entrepreneurs’ to prepare, understand and interpretation of financial statements are critical in this context.

A Social Performance Management Framework for Islamic Microfinance Institutions

2019 ◽  
Vol 16 (1) ◽  
pp. 53-69
Author(s):  
Siti Nabiha Abdul Khalid ◽  
Sheirijah Sheikh Kamaruddin
Keyword(s):  
Performance Management ◽  
Mission Statement ◽  
Social Performance ◽  
Governance Structure ◽  
Microfinance Institutions ◽  
Management Tools ◽  
Management Framework ◽  
Performance Management Systems ◽  
Islamic Microfinance ◽  
Tools And Techniques

The Islamic microfinance industry is in its infancy and it faces various challenges, including the lack of social performance management tools customised to the specific nature of the industry. Even though managing the performance of microfinance institutions has gained momentum with the development of several tools and techniques, the existing tools are inadequate for addressing the needs of IMFIs. Hence, this paper seeks to conceptualise a social performance management framework that is appropriate for IMFIs, to help them accomplish their financial, social and spiritual mission. It is argued that the spiritual dimensions and elements should be integrated into IMFIs’ social performance management systems, specifically in their mission statement, governance structure, internal systems and activities, as well as in their measures of output and impact.

METHODOLOGICAL FOUNDATIONS FOR THE DEVELOPMENT OF THE FINANCIAL STABILITY RISK MANAGEMENT SYSTEM IN THE INVESTMENT ACTIVITIES OF BANKS

2021 ◽  
Vol 5 (199) ◽  
pp. 75-80
Author(s):  
T.S. Fedorenko ◽  
Keyword(s):  
Risk Management ◽  
Portfolio Management ◽  
Management System ◽  
Financial Stability ◽  
Iterative Process ◽  
Management Practices ◽  
Negative Impact ◽  
Business Environment ◽  
Changes In Risk ◽  
Financial Result

The risk of loss of financial stability in the investment activities of banks is the probability of a negative impact of the negative financial result of the bank's investment activities on the capital structure and bringing it to an imbalance of funds. This type of risk is complex and includes several types of banking risks that have a direct impact on the financial stability of the bank. A system for managing such a risk implies a combination of three systems: the control system, the managed system and the result of the management. Each of the elements of the system is subject to the principles of managing the risk of loss of financial stability and thus contributes to achieving the result - minimizing the studied risk. Effective risk management is a crucial task of the bank to ensure profitability, as well as to maximize the value of shareholders. The business environment and the development of technologies had a significant impact on changes in risk management practices. The management of the considered risk is an iterative process. All links are constantly changing, and each change affects the other links. Managing this risk is a part of the bank's portfolio management process. For each bank, the management system is built based on the needs and specifics. Control elements can manifest themselves in a large number, so they need to be evaluated, grouped and determine the degree of influence on the financial stability of the bank's investment activities.

Mitigating Environmental Risks in Microenterprises

2016 ◽  
Vol 56 (1) ◽  
pp. 57-91 ◽  
Author(s):  
Marion Allet
Keyword(s):  
Risk Management ◽  
Environmental Risk ◽  
Management Practices ◽  
Research Policy ◽  
Future Research ◽  
Business Practices ◽  
Pilot Program ◽  
Microfinance Institutions ◽  
Financial Barriers ◽  
Environmental Risk Management

Recently, international funding agencies and practitioners in the area of corporate social responsibility (CSR) and small and medium enterprises (SMEs) have argued that microfinance institutions (MFIs) could promote the adoption of environmentally friendly business practices in microenterprises in developing countries. This article explores the potential and limitations of MFIs in promoting the spread of environmental risk management techniques and practices in microenterprises using a case study of an MFI-sponsored pilot program in this area in El Salvador. The author argues that caution should be exercised about the role that MFIs can play in relation to inducing change to the environmentally harmful practices of micro-entrepreneurs. In fact, this study reveals that the MFI had some difficulties in building internal skills and reconciling its environmental and performance objectives, limiting its ability to assist microenterprises in the area of environmental management. Furthermore, the pilot program, as it was designed, did not sufficiently take into account the psychological and financial barriers that constrain micro-entrepreneurs’ capacity to engage in any meaningful environmental behavior change. Finally, factors such as the lack of an adequate legal framework and local infrastructure also countered the effort of the MFI and limited the potential of microenterprises for effectively engaging in environmental risk management practices. The article concludes by outlining the implications of this analysis for future research, policy, and practice in this area.

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