Portfolio Analytics and Risk Management Practices of MFIs: A Global Survey

There is an overarching concern that the commercialization of microfinance has not necessarily seen the pursuing of returns that are adequately risk-adjusted. In particular, as MFIs grow, they often develop their portfolio risk management capabilities in a piecemeal manner, often failing to keep pace in terms of ability to handle the diversity and depth of analysis required. This report offers a more concrete understanding of the state of portfolio analytics and risk management systems that are operational at these MFIs, and of their ability to cope with challenging situations. In particular, this report focuses on the accounting system, portfolio management system (PMS), portfolio analytics system (PAS), and the risk management system (RMS).

The report, based on surveys conducted on more than 60 microfinance institutions (MFIs), seeks to gain a better understanding of the portfolio analytics and portfolio risk management practices that these MFIs engage in. This report is meant to further the microRisk Alliance’s mission of engaging microfinance risk management practitioners in a collaborative learning process to document and share findings on the risks facing the microfinance industry and help identify effective and replicable risk management practices and innovations.

This report is produced by TriLinc Global, LLC., in association with United States Agency for International Development (USAID) and in collaboration with the Center for Emerging Markets Enterprises (CEME) at the Fletcher School of Law and Diplomacy at Tufts University, under the aegis of the microRisk Alliance (MRA).