The objective of IFC’s Global Risk Management advisory program is to strengthen financial institutions’ risk management capacity and frameworks, loan portfolio monitoring, and nonperforming loan (NPL) management and workouts capacity, while supporting the development of emerging distressed asset markets.
Although initially launched in response to the 2008 global financial crisis to address risk management and NPL challenges in emerging markets, the program today engages client financial institutions to demonstrate that their growth and resilience to future crises requires implementation of better risk management systems and processes.
Through longer-term engagements and in-depth institutional building work with client financial institutions, the program takes a comprehensive approach by focusing on all aspects of sound risk management including risk governance, market risk, liquidity risk, credit risk, operational risk, asset liability management, and capital adequacy. A lesson from the 2008 global financial crisis is that all these risk areas are interconnected, and one type of risk can often transform into another.
At the sector level, sustained best practice dissemination and awareness-raising efforts are being conducted. Since early 2009, 150 risk management financial sector workshops and conferences were held in 36 countries across all IFC regions, including Eastern Europe and Central Asia, Sub Saharan Africa, South Asia, East Asia & Pacific, Latin America & the Caribbean, and the Middle East and North Africa.
Furthermore, a wide institution-building effort engaging 128 financial institutions across all regions continues through the use of diagnostics and capacity-building projects. As part of its knowledge management agenda, the program develops risk management tools to identify issues and support capacity-building work with client financial institutions.
The program also supports the development of emerging distressed asset markets, especially in Europe and Central Asia, part of a wider sector-level distressed asset resolution initiative closely coordinated with the World Bank Group. Additionally, the program works in emerging markets to encourage the adoption of best practices in responsible and ethical collections for servicing companies and banks’ collection departments. This effort is closely coordinated with the ongoing responsible finance agenda led by IFC and the World Bank.