Managing Risks

Managing risk is one the most important jobs we do at Carilend and is at the core of what we do. Whether it is assessing the creditworthiness of prospective Borrowers, using the technology to “keep out the bad guys” or building a Reserve Fund to help protect Lenders against missed payments and defaults, we apply the best practices from across the globe to ensure we manage all the risks involved.

We have adopted a multilayered approach to manage risks and this starts by “keeping out the bad guys”. We have adopted the highest global standards for screening prospective Borrowers and Lenders and applied technology, which was originally developed for the security and border control sectors, to screen out fraudsters, impersonators and other bad guys.

The next layer of defence is to individually credit score and credit check every prospective Borrower. This ensures we only approve those who are good with their money and able to pay their loans without difficulty. Applicants that cannot afford to repay will not be successful in their loan application, and only the most creditworthy people will borrow money via Carilend. We then assign a Risk Grade to every loan and an individual price to each Borrower based on their individual credit score.

Diversify Your Money

With Peer to Peer lending through Carilend, your money will be spread over many Borrowers to ensure you don’t put all your eggs in one basket. This diversification is an important way of protecting your money and managing your risk. You can start lending with chunks as small as B$50, and it is best practice that you spread your money out over many Borrowers. It is also best practice that, over time, you have a portfolio of at least 100 loans and hence have a minimum investment of B$5,000 (100 x B$50). This diversifies your risk and reduces your chances of losses. Our system will automatically diversify your loans over time.

The Reserve Fund

The Reserve Fund is a fund to help protect Lenders against Borrowers who do not pay their loans. The Reserve Fund is built up from contributions made by every Borrower at the time they take their loan. The size of each contribution is based on our assessment of the estimated rate of default of each Borrower based on our credit scoring assessment.

If a Borrower misses a payment, Carilend will follow up to get them back on track with their repayments. However, sometimes this will not be possible. If a Borrower misses three consecutive payments, this is termed as a default. Carilend, in conjunction with a debt collection agency, will continue to try to collect the loan.

At this point, a claim will be made on the Reserve Fund on behalf of all Lenders to that Borrower for the outstanding loan amount. The fund will usually pay the claim, but reserves the right not to. If the claim is paid, you will be repaid. Whether the claim is paid or not, Carilend and the debt collection agency will continue to seek repayment of the loan by the Borrower.

We will periodically assess the amount of the Reserve Fund against the outlook of the economy and adjust the amount of contributions to ensure that there is enough money in the fund to make all the estimated payouts over time. Furthermore whilst we will continually assess the fund to ensure it is sufficient, there is no guarantee this will always be the case. Whenever you lend money or invest, your capital is at risk, but with our multilayered risk management approach, we aim to minimize that risk.

Our Technology and Operating Standards

We have licensed our platform from a leading UK firm who uses this technology to operate Peer to Peer lending businesses in the UK and Europe. This technology is flexible, robust and incorporates all the protections and processes required by the regulators in the UK and Europe to manage risks and keep Lenders' money safe. It follows the best practice guidelines laid out by the UK Peer to Peer Finance Association which are being adopted globally as the gold standard in running a Peer to Peer platform. Carilend will operate to these standards to protect our Lenders.

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