Training on Risk Management in SACCO Operations

Module 1: SACCO Risk Landscape & Governance Risk

• Unique SACCO risks: member common bond, dual role (borrower/saver), volunteer boards

• Governance risk: board competence, conflict of interest, management override

• Regulatory framework: Co-operative Societies Act, SACCO regulatory authority (e.g., SASRA) requirements

• Case Study: Review a SACCO board minutes excerpt – identify three governance red flags and draft recommendations for the supervisory committee

Module 2: Credit Risk Management -Underwriting, Monitoring & Recovery

• Loan underwriting standards: affordability assessment, collateral valuation, guarantor verification

• Early warning indicators: missed payments, loan restructuring requests, check-offs

• Non-performing loan (NPL) classification, provisioning, and recovery strategies

• Hands-on Exercise: Analyze a loan portfolio of 50 members – calculate NPL ratio, identify top 5 at-risk loans, and recommend specific actions (restructure, demand letter, write-off)

Module 3: Operational Risk – Fraud Prevention & Internal Controls

• Common SACCO fraud schemes: phantom loans, cheque tampering, payroll deduction manipulation, share capital theft

• Segregation of duties, dual authorization, surprise audits, and whistleblower mechanisms

• IT risks: core banking system access controls, backup failures, cyber fraud (SIM swap, phishing)

• Case Study: Investigate a suspicious loan file where a member claims they never borrowed – trace the control breakdown and draft three remedial policy changes

Module 4: Liquidity & Interest Rate Risk Management

• Liquidity risk drivers: loan-to-savings ratio, member deposit behavior, undrawn commitments

• Cash flow forecasting: daily, weekly, and monthly liquidity gaps

• Interest rate mismatch: fixed-rate loans vs. variable-rate deposits, repricing risk

• Hands-on Exercise: Build a 30-day cash flow projection for a SACCO with $5M deposits, $4.5M loans, and $2M in undrawn loan commitments – identify a liquidity shortfall and propose solutions (borrowing, restrict new loans, call deposits)

Module 5: Risk-Based Internal Auditing & Enterprise Risk Management (ERM)

• Moving from compliance auditing to risk-based auditing (high-risk processes first)

• Risk control self-assessments (RCSA) for each department (credit, operations, finance, IT)

• Developing a SACCO risk register with inherent risk, controls, and residual risk ratings

• Hands-on Exercise: Complete a risk register for a mid-sized SACCO – identify top 5 risks, assign owners, set risk appetite thresholds, and present an audit plan for the next quarter