Toolkit: Risk Analysis in Savings Mobilization

Addressing risks associated with savings mobilization
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This toolkit addresses some of the major risks assumed by institutions that mobilize savings. They include liquidity, exchange rate and reputation risk.

Risk analysis and risk management are necessary to ensure the continuing safety and soundness of a savings mobilizing institution. In the context of savings mobilization, risk is defined as the danger caused by an event or a loss that could impair the value of savings on deposit or substantially affect the net worth of the institution. Managers must actively manage risks to prevent the occurrence of such damage. Risk management consists of:

  • Identifying and evaluating existing risks;
  • Making decisions regarding new transactions and changes in the risk profile, in relation to how much profit will be obtained for assumed risk;
  • Analyzing results and acting to manage risks.

Risk management ensures an adequate ratio of profitability to assumed risk, and brings that ratio in line with the institution’'s goals for liquidity, soundness and solvency. Tools to analyze risk include cash flow and gap analysis, deposit structure analysis and monitoring of account concentration.