Key highlights from the EMGN Spring Academy 2024 training workshop:

  • Effective risk management and accounting transparency are essential for financial stability, which in turn fosters sustainable economic development.
  • The Hellenic Development Bank (HDB) shared with peers their experience during Greece’s financial crisis, highlighting that the main challenges faced were funding disruptions, operational risks, and market risks. To overcome these challenges, it was key for HDB to implement proactive risk management, build trust and confidence, commit to safeguarding interests, adopt a comprehensive KYC process, and leverage data-driven decision-making.
  • CGSs in the region identified their top risks as credit risk, political uncertainty, operational risk, and cash flow risk linked to reimbursement. Managing these risks effectively is crucial for CGSs to maintain financial sustainability. However, as impact-oriented institutions, they must strike a balance between mitigating risks and fulfilling their mandate of promoting access to finance and contributing to economic development with state support.
  • CGSs use a variety of techniques to assess the evolution of risks such as credit scoring, stress-testing, and statistical and financial models.
  • CGSs discussed their pricing methods, considering factors such as sources of funds, risk margin, and overheads and operational costs.
  • A few years after COVID-19, it seems that CGSs portfolios remained relatively stable, largely due to state support.
  • To improve relationships with banks, CGSs can leverage digitalization to enhance communication, accelerate processing time, and simplify requirements.
  • Implementing IFRS 9 offers several benefits that can enhance financial reporting and overall financial management for CGSs. IFRS 9 can positively impact:
    • Classification and measurement
    • Forward-looking impairment models
    • Credit risk assessment
    • Dynamic hedge accounting
    • Clear disclosures
    • Consistency and comparability
    • Alignment with global standards
    • Support financial stability
  • IFRS 9 implementation for CGSs involves challenges related to data collection of historical defaults and macroeconomic variables, sophisticated modelling to estimate ECL, IT systems and infrastructure, and technical expertise. Addressing these challenges requires careful planning, investment in systems and expertise, and ongoing management attention.

The EMGN Academy is promoted by the Euro-Mediterranean Economists Association (EMEA), the European Institute of the Mediterranean (IEMed) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). EMGN Academies are carried out as part of a project financed by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH commissioned by the Government of the Federal Republic of Germany, namely: “Innovation Fund Jobs through Trade and Investment in the Southern Neighbourhood of the EU”.