Social activism
OpenSpace
By the end of 2008, together with RMSF, Pamiga and Crédit Coopératif, Elseware launched project OpenSpace. The project targets microfinance risk management. It will contribute to safer and more stable growth management in this area.
OpenSpace has been developed with worldwide microfinance institutions (MFI) in mind. It can offer them a prospective analysis tool for their risks. OpenSpace makes use of a quantitative approach to risks, in that respect similar to Basel II, but different in that risks are decompartmentalized. OpenSpace hence tackles strategic, financial and operational risks from a unified perspective.
OpenSpace will also be of interest to international donors, investors, or fund managers engaged in microfinance. Indeed, it will help them build a portfolio, assess the risks of an existing portfolio, or variegate a given portfolio. Insurers will also benefit from OpenSpace when they wish to create specific microfinance products.
The MFIs’ tool is an opensource code whereas that for institutional investors will necessitate subscription to a data base. OpenSpace features a library of probabilistic risk models (degradation of the granting processes, natural disaster, competition, internal fraud, etc.)
As regards quantification, OpenSpace can combine objective (from the MFIs’IS), subjective (experts’opinion), prospective (e.g. the MFI’s business plan), and external (e.g. natural risk indicators) data. Once quantified, risks are simulated to evaluate their potential impact on the organization (VaR). We use Bayesian networks and Monte Carlo simulation.
OpenSpace was certified by Finance Innovation in November 2008.
The project’s initial phase was field work in the form of a risk audit with about thirty MFIs in the world (India, Maghreb, West Africa, Middle East, and South America). This phase which completed by the end of 2009 allowed to narrow the tool’s requirements and to build a users network.
The project’s second phase will be launched in early 2010. The tool proper will be developed along with the appropriate database. We’ll then start promoting and demonstrating it to the MFIs and institutional investors while still pushing for more field work.
For any information about OpenSpace, please contact Patrick Naïm or Nawal Kerdougli.