Imarika Sacco is a financial institution that believes in taking proactive measures to manage credit risk. Like many other institutions, they use various strategies to mitigate the risks associated with lending.
According to SASRA’s guidelines on risk management, it is essential to identify, assess, and measure risks to manage them effectively. Imarika Sacco understands the importance of a thorough risk assessment, as it provides a clear picture of their standing and helps the management make informed decisions for the future.
To capture the Sacco’s risk exposure, risk measurement should represent the aggregate exposure of the Sacco to both risk type and business line. Imarika Sacco recognizes that risk measurement should encompass both short-term and long-term impacts on the institution.
The Sacco Board of Directors aims to establish systems and models that quantify their risk profile to the maximum possible extent. However, they understand that some risk categories, such as operational risk, can be incredibly complex and challenging to quantify. In such cases, qualitative measures can be adopted to capture those risks.
Imarika Sacco employs a range of credit risk management strategies to ensure the highest level of protection for their members. The management assesses creditworthiness by evaluating income, credit history, collateral, and repayment capacity. They also monitor loan performance and borrower circumstances to detect issues early on.
To ensure consistent risk assessment, they use standardized models and diversify their loan portfolio to minimize concentration risk. Additionally, they require collateral or guarantees for specific loans and set loan limits and exposure caps to prevent overexposure. They maintain provisions and reserves for potential loan losses and provide staff education and training on credit risk management.
At Imarika Sacco, they take pride in their commitment to managing credit risk effectively, ensuring that their clients receive the best possible service. They believe that these strategies will help them continue to grow and thrive in the future.