IFC helps Lankan Banks manage risk in tough times

IFC, a member of the World Bank Group, is working and sharing knowledge through workshops with bank executives in Sri Lanka and other South Asian countries to help them understand and better manage risks in the wake of the global financial crisis.

IFC hosted a workshop in Colombo, following successful sessions in India and Bangladesh.

The crisis response workshop, "Managing Risks in Good Times and Bad," discussed coping strategies and best practices for managing risks during tough times.

The participants included senior managers of financial institutions, rating agencies, audit and consulting firms from Sri Lanka and the Maldives.

The program covered the current state of global financial markets, risk management in financial institutions, operational risks, and insurance as a tool to finance risks. The participants shared experiences on risk management and implications of financial sector policy changes in developed and emerging markets, particularly in response to the turbulent and rapidly changing financial environment.

The lessons learned can guide practitioners and bankers on strengthening their operations and identifying potential risks.

"The financial crisis has taken a global form, affecting people's livelihoods directly and indirectly all over the world," said IFC Regional Manager for South Asia Per Kjellerhaug.

IFC Principal Banking Specialist, Michael Higgins said, "Poor risk management practices have resulted in the current financial crisis, causing a severe credit crunch and banks need to win back investors' trust."

The workshop helped the banking industry discuss liquidity, risk management practices, risk mitigating approaches and early warning signals to watch out for.

Global banks dealing with severe events especially the need to correctly assess risk and address them by insurance or other means. IFC Director for Corporate Risk Management, Lakshmi Shyam Sunder said good risk management is not about mechanically adopting best practices but it is about the right balance between elements such as independence and active judgment.