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Health and AIDS Risk Management in Practice

Risk management occurs through a feedback loop. Policies and risk governance structures are set. Risks are identified and assessed. Controls are determined and implemented. Data is collected. Circumstances change continually, and in light of new information and circumstances, policies, risks and risk controls may all be revised.

Risk management systems and infrastructure usually incrementally implemented, building on existing structures. Nobody could be in business without some risk management, even if they do not call it that. The initial focus is usually on the most threatening risks - those with highest frequency and highest associated loss. Thereafter progressive roll out can consider less frequent and/or less damaging threats.

That said, many of the health and AIDS risk controls described in Chapter 4 require existing capacity to implement successfully. For example an MFI would be ill-advised to implement Insurance products without adequate knowledge, and management and administrative capacity, or to introduce an AIDS education programme for clients before educating staff. While there is no hard and fast rule around the ordering of HIV & AIDS risk management steps, the stART of Chapter 4 provides some more detailed suggestions around how health and AIDS risk management can be implemented so as to ensure an MFI does not take on something before the preconditions for success are in place.

Buy in throughout the organisation, and strong leadership and support from top management are essential. Without these, risk management efforts will stumble at operational implementation, when policies, risk assessments and control implementations are required in individual business units.

MFI risk management must select the framework elements appropriate for the MFIs size and budget. The above framework can readily be implemented in a simple manner, condensing the tasks and roles into a few key roles, documents and processes and remain effective if these are diligently implemented.

Good risk management requires considerable skills and capacity. Many of the largest banks and insurers in the world rely on consultants and specialists in addition to significant internal resources to assist them in constructing and implementing integrated risk management frameworks. MFIs will need to consider realistically the resources that they require to manage their business, given its particular scale, nature and budget constraints, and to look at supplementing those resources externally as required. This Guide together with some of the other resources is intended to support MFIs in the process of developing their own skills, but it is unlikely that Guides on their own will be sufficient, particularly for an MFI or manager new to the risk management game.

Useful Resources

Useful Resources Section 2.1 - 2.4

  • Institutional and Product Development Risk Management Toolkit, MicroSave, Pikholz et al, May 2005
    http://www.microsave.org/toolkit
    PART I, II and III of this toolkit provide a general framework for identifying, assessing, mitigating and monitoring risk in the MFI as a whole.
    PART V gives more information on the institutionalisation of risk management.

  • A Risk Management Framework for Microfinance Institutions, GTZ, July 2000 http://www.gtz.de/de/dokumente/en_risk_management_framework_for_MFI.pdf A framework for internal risk management systems and processes. It presents guidelines to implement the core principles of risk management and targets Board of Directors and managers.

  • Tool for developing a financial risk management policy, WWB, Schneider-Moretto, June 2005, http://www.swwb.org/English/4000/wwb_publications/frm_tool.htm (US$ 25). A tool giving detailed policy-design template for risk management and checklists of key Policy components.

  • Microfinance and HIV/AIDS : Tools for Making Institutional Changes in Response to HIV/AIDS , USAID - AMAP, Fraser et al, September 2004 http://www.microlinks.org/
    Chapter 1 of this tool provides guidance on the development of an action plan to address HIV & AIDS .
    Starting point is Board resolution and development of action plan, not risk management per se.

  • Microfinance and HIV/AIDS : Defining Options for Strategic and Operational Change, USAID - AMAP, Green, et al., update September 2004 http://www.microlinks.org/
    This facilitator's manual is an elaboration of the previous resource.
    PART III provides practical guidance to evaluate the capacity for institutional change and also provides more information on the enhanced responsibilities of Board in an HIV & AIDS context.

  • Surviving Disasters and Supporting Recovery: A Guidebook for Microfinance Institutions, Miamidian, et al, February 2005, http://www%20wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2006/03/23/000160016_20060323124644/Ren%20dered/PDF/317780Surviving0disasters01PUBLIC1.pdf
    This guide provides a series of exercises and references to tools to assist MFIs to plan and implement a disaster management strategy. It helps MFIs assess the risk of a disaster, their clients' needs and their own institutional capacity to respond.
    Finally it offers guidance for preparation, response and recovery. Chapter 2 and 3 on institutional and client preparedness respectively provide some useful suggestions for health and HIV & AIDS risk management.

  • Improving Internal Control, Technical Guide #1, GTZ and Microfinance Network, Campion, 2000. http://www.gtz.de/de/dokumente/en_improving_internal_control_Campion.pdf This publication focuses on implementation of internal controls to monitor risks before and after operations. Internal controls are considered to be an integral pART of risk management

  • MicroSave Briefing Note # 23 Proactive Risk Management: Lessons for Microfinance Institutions, Pikholz and Champagne, http://www.microsave.org/Briefing_notes.asp This two-page document briefly describes the need for risk management and key issues for successful risk management.

  • MicroSave Briefing Note # 34 Implementing Risk Management at MicroSave's Partner Microfinance Institutions, Champagne and Pikholz http://www.microsave.org/Briefing_notes.asp This two-page document describes the processes and experiences with implementing a risk management framework using MicroSave's Institutional and Product Development Risk Management Toolkit.


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