Credit Risk Management in Cordillera Community Microfinance (CCMI), Inc.

Abstract ―​

This study aimed to assess credit risk management in Cordillera Community Microfinance Inc. (CCMI). The study was conducted in total enumeration at the branches of CCMI in the Cordillera region with 66 respondents. Respondents were chosen through purposive sampling, a combination of current Board of Trustees (BOTs) at the time of the survey, the unit heads, account officers, and finance and administrative staff per branch. The study used a descriptive research design and descriptive survey method, which included collecting and analyzing respondents' responses using a survey questionnaire as the main tool. Results of the study suggest that employees have much awareness of the credit risks associated with the loan products and portfolios since all employees undergo new employee trainings and most are engaged in operations of the company. The credit risk management objectives were also much attained with objectives related to the periodical review and update of policies and procedures, regular implementation of independent and objective loan review process, and actions regarding early identification and timely interventions to ensure loan quality having the lower results among the objectives. Fortuitous events such as natural calamities, outbreaks and the health of clients, and economic factors were considered to have very high contribution to credit risk in the company. The company has strategies to manage this risk, but the company can still enhance them not only to ensure that processes are streamlined, and objectives will be attained effectively and efficiently. The conclusions of the study are as follows: Determining the extent of risk awareness inside the organization through employee feedback is a critical step in developing and putting into practice prompt and efficient credit risk management strategies; The organization's credit risk management objectives serve as a roadmap that should be frequently visited and given equal weight to guarantee that credit processes, procedures, and policies are evaluated and updated on a timely basis for an efficient and effective implementation of strategies; and The nature of microfinance exposes them to a variety of risks, but with the correct strategies in place and efficient execution, the organization could reduce the effects of credit risk.