MEFMI Conducts Training on Risk Assessment for the Reserve Bank of Malawi

As part of the ongoing programme to train new examiners at the Reserve Bank of Malawi, MEFMI conducted a workshop focusing on Assessment of Risk in Financial Institutions from 17 to 21 April 2023 in Mangochi, Malawi.

Assessing the risks that financial institutions are exposed to is a critical part of every examiner’s job. Every supervisor must be able to identify and assess the risks and the measures put in place by the supervised entities to mitigate the risks. The Basel Core Principles for Effective Banking Supervision acknowledge the need for a Risk-Based Supervision (RBS) approach in which more time and resources are devoted to larger, more complex, or riskier banks. In the application of an RBS framework, supervisors are expected to assess risks borne by supervised entities in a broader context than that of the balance sheet of individual banks.

In addition, the Basel Capital Framework emphasises the importance of requiring banks to hold capital that is commensurate to the level of risk inherent in their operations. Under Pillar 2 of the Framework, supervisors are required to conduct a Supervisory Review Process (SRP) to determine the level of capital an institution should hold by reviewing the material risks of the institution and the available system of managing them. The SREP is meant to ensure that banks have adequate capital to support their risk-taking behaviour and encourage them to develop and implement appropriate risk management techniques for monitoring and managing the risks.

The workshop was officially opened by Ms Chimwemwe Kachingwe, the Director, Bank Supervision at the Reserve Bank of Malawi. In her remarks, Ms Kachingwe underscored the importance of the training to the participants and encouraged them to participate fully. She also paid tribute to MEFMI for its commitment to supporting the Reserve Bank of Malawi in its capacity development initiatives.

The workshop’s objective was to enhance the participants’ understanding of risk management and assessment for banking and capital market institutions. It comprised 13 sessions covering a broad range of topics including operational risk, market risk, liquidity risk, market abuse, emerging risks, and the Basel Capital Framework.

A total of 26 participants from the Bank participated in the training which was facilitated by Mr Clemence Chimwanda (Chief Risk Officer at CBZ Holdings), Mr Dercio Mutimucuio (MEFMI Fellow and Director, Prudential Regulation at Banco de Mocambique) and Ms Evelyne Mbithi (Senior Risk Manager at Capital Markets Authority in Kenya). Of the total participants, 12 (i.e., 46%) were female.

By Noel Mahombera