A Practical Approach to Key Credit Risk Management Challenges in the Pacific

Drawing on the experience of practitioners in the Pacific, this document provides an overview of client and credit risks, along with mitigation strategies and policies that financial services providers may wish to consider. 

All financial services providers are vulnerable to a wide range of risks, and those providing credit and other financial services to clients outside of the formal financial system are no different. What makes credit risk management different for many providers of microfinance is a lack of conventional risk mitigation means, such as collateral and guarantees. It is particularly important where financial services are provided using group or community models to achieve repayment.