RISK MANAGEMENT FOR DEPOSIT-TAKING SACCOs

Saccos, like any other business enterprise, face a variety of risks that pose negative threats to their business. Risk-taking is an inherent and unavoidable aspect of financial service provision against which reward in the form of profits is sought.

However, excessive and poorly managed risks can lead to losses and endanger the investments and savings of Sacco’s members and depositors. Risks taken are justified when they are understandable, measurable, controllable and within a Sacco’s capacity to withstand adequate financial returns.

Sound risk management systems enable managers of Saccos to take risks knowingly, reduce risks where appropriate, and strive to prepare for an uncertain future.

The Sacco Societies Regulatory Authority (SASRA) issues these guidelines on the risk management systems that are expected of all deposits taking Saccos. These guidelines outline the minimum standards for Saccos towards the prudent management of risks.

The major objective of these guidelines is to contribute towards maintaining and improving financial safety and soundness through better risk management practices in all Saccos. These guidelines do not replace, but rather supplement, the applicable laws enacted in Kenya, and the regulations and guidelines issued by the Government of Kenya and SASRA. These guidelines are in line with internationally accepted best practice risk management principles.