Risk management involves making educated decisions about how much risk should be tolerated and how to mitigate and manage the risk that remains. Good management will limit risks linked to particular products, services, or transactions. Quantitative methods to identify, monitor, and control the different factors in play can be used to assess risk. Well-executed risk management can help to build credibility in the marketplace and create new growth opportunities. However, if risk is poorly managed, investors, lenders, borrowers, and savers may lose confidence in the organization, funds may dwindle, and the institution may not be able to meet its objectives and may eventually go out of business.

Microfinance organizations face many risks that threaten their long-term viability and sustainability. Disasters and conflict cannot be controlled, but can be prepared for, and their impact minimized. Internal issues, such as credit and liquidity risk, market and pricing, operation, compliance, and legal risks can be managed. Careful screening, monitoring and evaluation, accurate reporting, and a strong credit culture combine to provide the checks and balances needed for successful risk management.

Informed risk calculation allows an institution to assess new market opportunities, ensure existing operations are constantly improved, and deliver competitive, effective goods and services to its customers. This is particularly important to microfinance institutions involved in both financial and social objectives. The challenge is to nurture a culture that rewards good risk management without discouraging risk taking.

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This study is part of a market monitoring exercise to understand the range of risks and how they are perceived by multiple stakeholders in the Indian fintech lending sector.


This Note describes some of the uses of artificial intelligence and machine learning by financial institutions; considers the supervisory responses to such uses; and highlights some ways in which supervisory authorities can themselves use AI and ML to improve the effectiveness and efficiency of supervision.


This Technical Guide summarizes the lessons learned from engagements with 15 asset finance companies in Sub-Saharan Africa and Asia between 2018 and 2020 and offers suggestions on credit risk management.

News & Events

The latest news and upcoming events and training from the global financial inclusion community on this topic.