Helps to identify the risk and opportunities of an organization

1. FAST FACTS FOR BEGINNERS
ALL THAT YOU NEED TO KNOW ABOUT
RISKS
AND
OPPORTUNITIES
AND
MANAGING RISK
FOR
DEVELOPMENT
Source:
World
Development
Report
2014,
The
World
Bank
Source:
World
Development
Report
2014,
The
World
Bank Source: World Development Report 2014, The World Bank
Source: World Development Report 2014, The World Bank

2. FEW BASICS
• Risk and opportunity go hand in hand in most
decisions & action taken by countries,
enterprises and families as they seek to improve
their fate.
• It is intrinsic to the process of development
• If ignored, risks can turn into crises that
reverse hard-won gains and endanger the social
and economic reforms that produced these
gains.
• Managing risks responsibly and effectively has
the potential to bring about security and a means
of progress
potential of
gaining or
losing
something
of value
A chance for progress
or advancement

3. 5 INSIGHTS ON THE PROCESS OF RISK
MANAGEMENT
1. Take risk to pursue opportunities
2. Avoid adhoc and unplanned response
3. Confront risks by identifying,
prioritizing & addressing through
private & public action
4. If it is beyond individual means share
responsibilities (from households to
international community)
5. Governments have a critical role in
managing systemic risks

4. RISK MANAGEMENT IS IMPORTANT FOR EVERYONE

5. BENEFITS OF RISK MANAGEMENT OUTWEIGH
THE COST
RISK MANAGEMENT CAN:
• Save lives
• Unleash opportunities
• Avert damages
• Prevent development
setbacks

6. THE RISK CHAIN: UNDERSTANDING THE ENVIRONMENT
IN WHICH RISK & OPPORTUNITIES ARISE
RISK MANAGEMENT
is the process of
confronting
risks, preparing for
them, and coping
with their effects.
RESILIENCE is
characterized by
the ability of
people, societies,
and countries to
recover from
negative shocks,
while retaining or
improving their
ability to function.

7. COMPONENTS OF RISK MANAGEMENT ARE
INTERLINKED
Better knowledge
can lead to more
efficient
decisions
regarding the
allocation
of resources
between
insurance and
protection.
Likewise, better
insurance and
protection can
make coping less
difficult and
costly

8. A SET OF SCREENS TO AID RISK MANAGEMENT

9. A HOLISTIC APPROACH TO MANAGING RISK
These systems
have mutual
interactions,
often
complementing
and sometimes
substituting for
each
other’s risk
management
functions.

10. OBSTACLES – WAYS TO OVERCOME THEM

11. FORMULATE POLICY RESPONSES
Designing effective public policy must go beyond simply
identifying potential risks to analyzing obstacles to risk
management. Two important criteria are:
1. Be realistic
• keep it simple,
• Tailor technology to local circumstances,
• Concentrate on low-hanging fruit and win-win Solutions,
2. Build a strong foundation for improved risk management over
time
• Create institutional arrangements,
• Choose flexible solutions and build in learning,

12. INDIVIDUALS, HOUSEHOLDS, COMMUNITIES & RISKS:
• - Individuals are very good at managing relatively small and
idiosyncratic risks
• - People respond to shocks on their own & by pooling risk with
others, relying on informal credit & assistance to cope with shocks
• they struggle when shocks become large, systemic, or sequential
• - Outcomes are better when women are empowered
• - Cohesive & connected communities create resilience
• - Communities are sometimes the only safety net that poor people
have access to
• - Small size and informal nature limits what they can achieve
• - They need local governments to provide essential government
services that only governments can provide (water, sanitation,
waste, policing, urban planning etc)

13. INNOVATIONS IN SOCIAL INSURANCE
• There's a huge role for public action in
dealing with risk, because risks are
covariate
• Social capital helps reduce costly coping
• Two example of how the state has been
developing innovative ways;
• 1. Public employment guarantee
scheme in India
• 2. Conditional cash transfers in Brazil
• Households and communities are
important. They're the first line of
defense, but they're not enough

14. POLICY PRIORITIES TO IMPROVE RISK
MANAGEMENT AT THE HOUSEHOLD LEVEL

15. POLICY PRIORITIES TO IMPROVE RISK
MANAGEMENT AT THE COMMUNITY LEVEL

16. KEY CHALLENGE – Mainstreaming Risk Management
into development agenda
3 steps to do it:
1. Change planning approach - From planning under certainty,
to considering change and uncertainty as fundamental
characteristics of modern economies.
2. Orient policies to integrated risk management
• Households - universal health insurance, and conditional cash
transfers.
• Communities - public infrastructure and services
• Enterprises - streamline regulations and improve public services
• Macroeconomy - countercyclical monetary and fiscal policies
• International community - an incremental approach towards
global agreement
3. Establish national risk board - to integrate risk management,
considering synergies, trade‐offs and

17. FIVE POLICY PRINCIPLES TO GUIDE PUBLIC ACTION
1. Do not generate uncertainty or unnecessary risks - do no
harm principle
2. Provide the right incentives for people in institutions to do
their own planning and preparation, while avoiding
imposing risks or losses on others
3. Keep a long‐run perspective for risk management
4. Promote flexibility within a clear and predictable
institutional framework
5. Protect the vulnerable
Geley Norbu

18. Geley Norbu