Mapping of interest rate risks (at least every two years)
What is it?
A tool used by the MFI as a means of identifying, controlling, and managing key risks in its interest-rate risk profile. This can be in the form of a risk register, “heat map” (a graphical representation of the level of risk in the MFI’s interest-rate risk profile by product), maturity date, or type of interest rate (fixed versus floating or variable, among others).
Why is it important?
The MFI’s management needs to be able to take a high-level, “top-down” view of the MFI’s risk profile as it related to interest-rate risks. By prioritizing the level and impact of the particular risk, management is in a better position to manage the related risks on a proactive basis.
Key things to watch out for
- Who participates in the mapping exercise?
- What is done with the interest-rate risk map when completed?
- Is there evidence of actions taken and results from the exercise?
- Are the risks ranked in terms of “high,” “medium,” and “low”?
How to calculate
Not applicable.
Benchmarking
Not applicable.
Resources
- Liquidity Management, A Toolkit for MFIs. Available at www.gtz.de
- Asset-Liability Management for Deposit-Taking Microfinance Institutions. Available at www.cgap.org
Evaluation
T2.A5-2NDT.RMT