Financial Management
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Box 10.1 Risk Management at Teba Bank, South Africa Risk governance structure. Teba Bank has established a risk-management structure that includes a General Manager for Risk, who reports to the General Manager. At the board level, risk addressed in the Audit Committee, a dedicated Risk Committee, and a Directors’ Affairs/Strategy Committee. The asset and liability committee and the credit management committee report to the Risk Committee. Risk governance process. Teba Bank’s board is ultimately responsible for the risk-management process; the Risk Committee is appointed to assist the board to fulfill this responsibility. The board reviews and approves risk strategies and policies developed and recommended by management. The board Risk Committee approves the Enterprise Risk Management Framework; through this framework ownership of key risks is allocated to the most
appropriate senior official. Members of senior management sign off on the Risk Management Framework as the risk owners. Risk management is a continuous and evolving process, involving monthly risk assessments. Risk appetite. Teba Bank’s board sets the risk appetite of the institution, similarly to setting major risk thresholds. The risk appetite is the degree of uncertainty that Teba Bank is willing to accept to reach its goals. It covers products, markets, treasury limits, lending, and the like. Risk reporting. The board receives quarterly reports covering the top 10 risks, the risk register, and the risk watch report. Management receives these reports monthly. Source: Pikholz and others 2005.
Figure 10.1 Financial Management Functions of an NGO MFI Managing director
Finance and administration manager
Accounting Financial statement preparation Donor reporting Fixed asset management
General services Procurement Office management
Source: Author.
on the role of an expanded controller including preparation of financial statements, funds management, budgeting, and procurement activities. As mentioned in chapter 9, Human Resources Management, with transformation, the NGO
finance manager role is typically upgraded to Chief Financial Officer (CFO). As the complexity of the institution’s financial operations expands, the key activities of the finance manager expand and the required skills extend beyond accounting and