MANILA, PHILIPPINES (29 November 2023) — Several process and organizational improvements within the Asian Development Bank’s (ADB) risk management structure have helped ADB largely achieve its key risk objectives while retaining its AAA credit rating, a report from ADB’s Independent Evaluation Department (IED) said. The evaluation assessed ADB’s investment and credit risk management of its private sector operations from 2009–2021.
“Transaction processing times have been reduced through new approaches, nonperforming loan indicators are in line with peer International Financial Institutions, and actual credit losses have been low,” said IED Director General Emmanuel Jimenez.
The evaluation found several areas for improvement. “ADB needs to clearly define the risks it is willing to take in private sector operations, including under its development mandate,” said evaluation co-team leader Faraz Kazmi. “The evaluation further recommends that ADB continue to increase the efficiency of transaction approval and monitoring processes, while implementing and tracking more performance targets to align incentives for its operations and risk teams.”
“ADB can clarify pricing guidelines and make further progress toward an end-to-end management information system to enable better informed and quicker strategic decisions,” said evaluation co-team leader Gloria Paniagua.
The leveraging of private sector expertise and funding is becoming increasingly important because of the large amounts of capital required to meet developing member countries’ (DMCs) needs. Risk management and avoidance of undue credit losses are critical for ADB to catalyze the private sector on a sustainable basis. To implement its ambitious plans for private sector participation and growth in DMCs, ADB must manage its investment and credit risks in a timely, robust, and effective way to identify and mitigate risks of its private sector portfolio.
About Independent Evaluation at ADB
ADB's Independent Evaluation, reporting to the Board of Directors through the Development Effectiveness Committee, contributes to development effectiveness by providing feedback on ADB's policies, strategies, operations, and special concerns in Asia and the Pacific.