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Request for proposals: "Moving to holistic risk management"

Small enterprises and low-income workers are more vulnerable to risks than the rest of the population, and yet they are the least able to cope when crises occur. Many shocks – such as the illness or death of breadwinners, the theft or breakdown of productive assets, and the destruction wrought by disasters – negatively impact incomes while creating the additional challenge of increasing expenses. Under these circumstances, the working poor take a range of undesirable actions, such as selling their assets, borrowing at unfavourable rates, eating less or removing their children from school. These coping strategies have long-term implications, such as lasting poverty, over-indebtedness, malnutrition and an uneducated work force.

To successfully meet the risk management needs of small enterprises and low-income workers, financial institutions need to innovate and develop client-centric products and processes that are cost-effective and viable. Often savings, credit and insurance are offered independently of each other, which may not be as effective as an integrated product that combines the advantages of all three.

The ILO’s Social Finance Programme is inviting proposals from financial institutions in Indonesia and the Philippines that aim to implement an integrated risk-management solution for low-income households and/or small enterprises. The objective is to test risk-management solutions that combine savings, credit, insurance, and risk prevention. The ILO seeks partners for whom improving customers’ ability to manage risks is a strategic priority and who have the potential to leverage technology to scale the innovations quickly and achieve sustainability, while improving customers and shareholder value.

What is the ILO’s Social Finance Programme?

The ILO's Social Finance Programme, of  engages with the financial sector to enable it to contribute to the ILO’s Decent Work Agenda. In this context, we support banks, microfinance institutions, credit unions, insurers, investors and others to test new approaches, and to replicate successful products and processes.

For the past ten years, the ILO’s insurance work has been driven by the Impact Insurance Facility, which enables the insurance industry, governments, and their partners to realise the potential of insurance for social and economic development by reducing vulnerability amongst households, promoting stronger enterprises and facilitating better public policies.

What themes are we focusing on?

We are looking for partners that are interested in implementing innovations in the following areas:

  • Bundling a range of financial services that improve consumers’ ability to manage risk
  • Developing risk management solutions that supplement existing social protection schemes
  • Providing risk management solutions to micro and small enterprises, low-income workers and/or small-holder farmers
  • Delivering digital solutions that improve efficiencies and provide greater value to customer

What support will be provided?

The ILO will provide technical support to selected financial institutions to assist with project management, product development, and implementation. We will support partners through a product development process, build capacity, and identify and implement changes needed to effectively provide risk management solutions for the low-income market.

Support will be provided through technical assistance by the Social Finance team and the placement of a Social Finance Fellow with the partner for 18 months to provide technical inputs and project management. ILO Fellows are mid-career professionals with financial sector background and strong technical skills that provide hands-on technical assistance, business analytics and project management support to the innovation partners.

Who may apply?

  • Financial institutions – such as commercial banks, cooperative banks and credit unions, microfinance institutions, rural banks – that wish to implement a specific innovation to promote better risk management practices for its customers
  • Relatively mature institutions with a proven track record of delivering a broad suite of financial services, including credit, saving and insurance, to low-income and/or mass segments.
  • Institutions that are authorized to mobilize savings from its clients or members
  • Institutions with established internal control systems, the capacity to produce financial statements and provide regular updates on defined key performance indicators
  • All institutions must be based in Indonesia or the Philippines

What does the ILO expect from partners?

The ILO will work with partners to document and disseminate lessons learned. Partners are expected to participate in an action research process that analyses and documents the lessons from their innovative efforts. This process includes providing regular updates of the project, and reflecting why certain outcomes occurred (or did not). Partners would also be expected to actively participate in practitioner forums, both virtual and in person, to share their experiences with other organizations.

How will partners be selected?

Partners will be chosen through a rigorous review process, including on-site due diligence, considering key aspects such as track record, execution capacity, leadership, commitment, ability to reach scale and replication potential.

The selection process involves two steps. As a first step, partners should submit a short expression of interest that includes a brief description of the project, objectives and organizational capacity. We will select a few candidates to evaluate further. In the second step, we will visit the short-listed candidates and work with them to finalize the project proposal that will be submitted to the selection committee.

How to apply?

To apply, submit a proposal to socialfinance@ilo.org using the expression of interest form. The subject line of the email should be “Holistic risk management proposal”.