A risk is an exposure to the chance of loss. Risk is inherent to any business and informal financial service institutions are no exception. While financial service organizations and groups cannot eliminate their exposure to risks, through an effective risk management process, they can significantly reduce their vulnerability and ensure the continuity and viability of their business.

Risk management includes both the prevention of potential problems and the early detection of actual problems when they occur and helps to reduce the likelihood that a loss will occur and also minimizes the scale of the loss should it occur. Effective risk management is therefore extremely important for any financial service institution and central to its survival.

Unfortunately, informal financial service organizations and groups generally have poor risk management and are hampered by several challanges due to their operational model which lack traditional risk mitigation mechanisms such as collaterals, credit histories and guarantees.

The Finaco Platform allow informal financial service institutions to leverage technology, information interchange and several innovative tools and services practically at par with those available to their counterparts in the formal financial services sector with deep pockets, for enhanced and effective risk management and improved governance. The result is that the informal financial service institutions are able to infuse their operations with cost effectiveness, high portfolio quality and minimal risk of loss or misuse of funds which all contribute to improved growth and development.