It’s all about the risk culture and coaching

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Despite all the tools, algorithms, models and tests that we use to assess and formally manage risk, the core of risk management seems to me still more of an art than science. As I am working with financial institutions of all size and on almost all continents, I am always searching for a common denominator in the management of risks. What makes the credit risk assessment of a commercial bank in the US similar to the work of a leasing company in Africa or a microfinance institution in South America?

 I think, it’s the approach to the risk assessment. It is the way, how credit analysts study the risk profile of a client and how they try to truly understand all the key risk factors that are driving the client’s ability to serve his obligations. There are certainly special niches, where we can rely scoring models to simplify the assessment. For a large part of the lending business, it is still the assessment and the experience of the analyst, combined with a watertight documentation and execution that eliminates avoidable risks.

To create the perfect environment to enable credit analysts to perform their work, we need to establish a good risk culture. This culture combines well written policies and guidelines, the right tools that simplify the work without relying on black box style algorithms, and a work environment that provides the space to learn and collect experience from the team, from superiors, and from the clients themselves.

In this environment, policies and guidelines take an key role to define the borders of the work. A successful analyst is one who does not need those borders, because he takes them as a minimum requirement and goes beyond those rules in the assessment.

More important for an analyst is to be part of a good team, managed by the right coach (team leader/boss). In sports we always accept that even the best players rely heavily on the support of a coach and on training which takes more time than the actual competition. In the regular work environment we still assume that the employee enters the job perfectly prepared. Credit analysts like other employees often do need a coach who guides them, puts them on the right track, and challenges their performance, even if they are working well. Making the team better and more experienced is something we strive for in sports but sometimes neglect in the work environment.

Who is the right coach for a team? To continue with the analogy of sports, the answer is: it depends! It depends on “the league in which the team of analysts is playing”. Many financial institutions play in local or regional markets. Ideally they have composed teams of analysts who fit perfectly well in that environment. They are satisfied with this environment and are happy to work with the clients and solve the challenges that this specific market has. In the same way, also the coach needs to fit in that environment.

The same holds true for the training methods. There is no need to apply training methods which are used to get players in shape for the champions league, if the actual competition takes place in a regional league. It might actually be counterproductive, because the methods do not address the preconditions and needs of the analysts. Nothing is more frustrating than the feeling of a bad and unqualified player.

In summary, if the initial assumption, that there is still a lot of art in the management of risk is true, then it is recommended to create a risk culture that supports work in the best possible way and creates an environment in which analysts can work well while being challenged to improve continuously.

Posted in Risk Management Tagged with: , , ,

How easy it is to spend 1 Dollar – Create the culture to give every day!

From the moment we started Proyecto Horizonte, my way of thinking about spending small amounts of money changed. Knowing that it cost about US$ 1 to send a child for one day to our programs put so many expenses in perspective:

  • Spending US$12 for lunch equals a teacher’s salary for a full day
  • The glass of red wine at a nice restaurant, at US$13 for two people sends a full class to the daycare center, and actually includes 3 healthy meals
  • The occasional cab-ride to/from work at US$15 (taking my hometown of New York as a reference) for one way sends more than half a class to the programs

You can break that down to many of the daily expenses. The latte at the coffee shop, the candy bar from the vending machine and many more. Don’t get me wrong, I am not promoting the ascetic lifestyle, but maybe it feels good, occasionally to forgo the second glass of wine or bring your own lunch from home and give the saved money to a worthy cause. If you only give US$ 1 every day, that adds quite nicely over the months and could offer a child at Proyecto Horizonte a great perspective to improve its life!

There is a great App from Google which runs on the iPhone and on Android phones called OneToday. This allows you to donate US$1 every day to hundreds of different projects. To get you started, I will match your donation to selected activities at Proyecto Horizonte, like this one:

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Posted in Community Development, Personal Tagged with: , ,

10 Years in the Making

If someone had told me 10years ago what would become of my idea to use some of my savings for a good purpose, I may not have even laid a brick. I am thankful that no one told me because 10years later, what started with that first brick has become a thriving organisation that has changed lives and part of my very soul.

10 years have flown past like laps of a race. We have grown, succeeded, changed, learned, evolved. Whilst the race is far from over, I feel now is a good time to recognise all that we have achieved in those 10 years.

What we have achieved at Proyecto Horizonte is the result of support from our friends and donors who trust and support us in our work to change lives and the extraordinary dedication and commitment of many people who make the change happen, the majority of who, like me, never knew how their lives would change after starting with Proyecto Horizonte.

It is impossible to mention each and every one who contributed time and dedication over the past 10 years. However, I will start by mentioning one person. He was and is most essential for Proyecto Horizonte, my partner in crime and co-founder, Osvaldo. We met, looked in each other’s eyes, we both knew we were a match and we started to work immediately. Osvaldo gave me the confidence that we can build and create this together. His spirit and his strength make him a role model for all those who meet him and this is captured when people call him ‘the heart of Proyecto Horizonte’ . Although he suffers from health problems, he never backed down from any challenge, and always found a way to overcome the many obstacles that were encountered.  The community and authorities listen to him and he built the trust that makes us a well-regarded partner of our local stakeholders.

Then there is the team, working tirelessly every day with the community and achieving a result that has no comparison. Some of our staff members are with us since the beginning. They work tirelessly to ensure that everything we is developed and adapted to respond  to needs of community and is as efficient and effective as possible. Our volunteers on-site help us improve the services we offer where extra hands are needed or enable us to offer services that would not be possible without them. There are the volunteers internationally who dedicate a tremendous amount of time managing the sponsoring program, the online shop, the social media campaigns, and many other fundraising events.  Last but far from least, is my family who help me directly to run Proyecto Horizonte but also give me the support so I am physically and mentally able to continue in this adventure.

What is Proyecto Horizonte?

Proyecto Horizonte is an organisation that provides the services of education, health care, and local development to a community that used to be one of the poorest in the region and known for its high crime rate. It was born from the desire of Osvaldo Castro to do more for community where he was providing humble breakfasts to children.  We have grown to have a vision much greater than that, which is to improve the quality of life of the community and break the poverty cycle within a generation. We do this through an integral approach to ensure that we are working to reduce all limitations to growth and development for individuals, families and the community.  We work until we see a positive change in the lives of our participants

Proyecto Horizonte is a platform that combines the skills and dreams of many people. It is the place where the team and the community can take on responsibilities and implement ideas. Our approach is always to work with the community on identifying their problems, their causes and their solutions. We like to ensure that every person has access to the core programs and we strive to train the next generation of responsible community members. Our goal is sustainability and we develop measures which can demonstrate our impact.

We currently work in one area on the outskirts of Cochabamba and our outreach is expanding within this zone. We also plan to expand our outreach and replicate the platform in another community where we identify a need and a population that is looking to improve their life.

We operate thanks to donations from our supporting friends and, where possible, with contributions from the participants.  We are proud of the trust we receive from our donors and we know that they expect us to handle our funds responsibly and economically. We know that the economic situation for many of our friends changed and we are honored that despite harder times, they continue their support. Countless birthdays have been dedicated to Proyecto Horizonte, schools all over the world collected funds and many small fundraisers have been organized. We have many partner organisations with who we work with to provide services to the communities or raise funds. We are always open to partnering organizations who would like to join us on our journey, either permanently or for some time.

The combination of our team’s work, the personal support from our friends, and the positive results that we have achieved so far complete the picture of Proyecto Horizonte. It is as much work in progress as a dream in the making. We are confident that we can achieve much more in the future and we hope that we can increase the support we receive to expand our work further.

Posted in Community Development, Personal

Getting started!

I am working on building this site with information about my work in the areas of Risk Management and Community Development. Over the next days and weeks you will see the page filled with content.  While I build the page, please check out

Posted in Community Development, Personal, Risk Management