Households play an important role in managing risks through informal means such as providing support to elderly family members. Households face risks from income shocks, health issues, natural disasters, and death of earning members. Evidence shows that elderly people frequently live with other family members in developing countries as a form of risk management. However, households also face barriers to effective risk management, such as low education levels, lack of awareness, and discrimination. Formal financial services can help households manage risks through savings, loans, insurance, and pensions, yet access and usage of these services remains low, especially for women.

1. HOUSEHOLD RISK MANAGEMENT
Using Financial Services for Risk Management

2. ROLE OF HOUSEHOLD IN RISK MANAGEMENT
Being together
in good and bad
times
Taking care in
old age
Increasing
labour supply
after an income
shock
Putting in extra
work hours in
case a working
member is sick
Household members can help one another manage risk and pursue
opportunity

3. TYPES OF RISKS FACED BY HOUSEHOLDS
➤ Income
➤ Health
➤ Natural disasters
➤ Death of earning member

4. EXAMPLE OF RISK MANAGEMENT BY HOUSEHOLD
Evidence on living arrangements in 17 developing countries shows that on average
28 percent of households have members over the age of 60, a signficantly higher
share than this age group represents in the total population
In China, 90 % of elderly with
disabilities living with their families
have access to support, compared
with 73 % of elderly living alone
Elderly People Frequently live with other family members
Source: Page 112, WORLD DEVELOPMENT REPORT 2014

5. BARRIERS TO HOUSEHOLD RISK MANAGEMENT
Lack of
awareness
Low levels of
coordination
between family
members
Low levels of
education and
skill base
Discrimination of
one member /
gender
Lack of access to
resources due to
socio-economic
reasons

6. SOME EXAMPLES OF BARRIERS TO RISK MANAGEMENT
Source: Page 117, WORLD DEVELOPMENT REPORT 2014

7. SOME EXAMPLES OF BARRIERS TO RISK MANAGEMENT
Source: Page 117, WORLD DEVELOPMENT REPORT 2014

8. SOME EXAMPLES OF BARRIERS TO RISK MANAGEMENT
Source: Page 121 WORLD DEVELOPMENT REPORT 2014

9. USING FINANCIAL SERVICES TO MANAGE RISK
Savings
Loans Insurance
Pension

10. USING FINANCIAL SERVICES TO MANAGE RISK
Savings
Saving for planned and unplanned expenses
Planned e.g. School fees, business expenses, marriage
Unplanned e.g. death and funeral, medical expenses, job loss
Loans
Loans for consumption smoothening or for starting /
expanding micro-enterprise
Insurance
Insurance to protect against unforeseen events such as death,
health issues, and crop failure
Pension
Pension schemes to save specifically for old age and related
expenses

11. FINANCIAL INCLUSION: STATUS
According to the World Bank Global Findex database 2014:

12. According to the World Bank Global Findex database 2014:
FINANCIAL INCLUSION: WOMEN ARE MOST EXCLUDED

13. BARRIERS TO USAGE OF FINANCIAL SERVICES
Lack of knowledge about the services
Lack of access to affordable financial services
Low levels of usage and access issues for women
Lack of stable incomes

14. THANKS!