The European Investment Bank (EIB) and IFC, a member of the World Bank Group, have signed a cooperation agreement creating a Global Emerging Markets (GEMs) Risk Database Consortium to pool data and strengthen risk-management practices among multilateral development banks.
The agreement formalizes the relationship between IFC and EIB in the area of pooling loss data. It also provides a consistent framework for potential partners, including international financial institutions (IFIs) such as the European Bank for Reconstruction and Development, the African Development Bank, and the Inter-American Development Bank, which will be joining the Consortium.
EIB President Philippe Maystadt said: “In the context of promoting the development of the financial markets in emerging countries, the GEMs Risk Database initiative will enhance the cooperation and synergies among IFIs.”
“This is a great knowledge-sharing opportunity for IFC,” said Lars Thunell, IFC Executive Vice President and CEO. “We are pleased to be a part of this initiative, which will help strengthen risk management practices worldwide.”
Credit-risk data, such as default and recovery rates, have become a key element of the risk assessment process. The initiative will expand the universe for such information and strengthen risk management practices among organizations. It will also provide a common platform for enhancements and knowledge sharing.
In collaborating to create this data consortium, IFC and EIB worked to standardize the data collection processes. They structured the data in a way that keeps counterparts’ identities anonymous and preserves data confidentiality. The risk database and common methodology adopted by EIB and IFC have been reviewed independently by Standard & Poor’s and will now be made available to other multilateral development banks.
The consortium has been jointly spearheaded by Alain Godard, EIB Director for Financial Risk Management and Lakshmi Shyam-Sunder, IFC Director for Corporate Risk Management who described the initiative as especially fulfilling because it goes beyond the needs of individual institutions and creates something of wider benefit.
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