Managing risk

It is impossible to work in international development and poverty alleviation without incurring some risk. Opportunity International Australia has a formal risk identification and management process, identifying risks such as the inability to source capital, governance and succession issues, and social and political instability.

Risk is spread intentionally throughout our Indian and east Asian portfolio, as we fund a mix of start-up and established microfinance institutions in both rural and urban areas. We also understand that relationships and informal networks play an important part in managing risk – in both east Asia and India, we have leveraged experience in the market and long-standing relationships with the majority of the key players.

Opportunity uses a standard process when looking at risk management. We consider inherent risks, place controls to manage those risks and use these controls to determine the residual amount of risk remaining for each risk identified.

Risks are identified by the management team and the Board. They are plotted on a risk matrix which assesses the likelihood and impact of each risk.

The top 10 risks are actively handled by the management team. The team meets on a six-monthly basis to ensure that key risks are being managed appropriately (each risk is assigned to a responsible person) as well as to see if any new risks have been identified.

These top 10 risks and their planned management are reported to the Audit and Risk Committee on a regular basis, and to the Board on an annual basis.

The Audit and Risk Committee also assesses internal controls within Opportunity and looks at relevant legislative and compliance requirements to ensure they are being managed. In addition to this, they review changes to operating environments, systems and personnel.

All risk types are considered, including credit risk, operational risk and market risk.