CPAN was excited to be involved in USAID’s roundtable on risk and fragility in Washington last month. The session discussed the role which different risks have on the achievement of sustainable poverty reduction and how risk can better be integrated into programming so that the objectives of ending extreme poverty and achieving food security can be achieved.
The session on risk management in functioning market contexts asked if, and how, a risk management dividend can be realised – or a situation where people change their behaviour because they feel more secure in the face of anticipated future risks. They feel more secure because they believe that those risks will be adequately managed.
The session explored a number of areas, the following being particularly relevant for CPAN’s work on poverty dynamics;
- The notion of ‘complex risks’ – or the interlinking of different risks – which can be occurring at different scales. Frequently a weather shock, for instance, does not operate in isolation but may occur in combination with other risks and shocks. Covariant risks (such as drought or flooding) can interact with idiosyncratic risks (such as ill-health) to magnify the impacts of both;
- It is not just the direct impact of shocks which is important, but the presence of risk also means that people can change their behaviour in a manner which maintains their poverty;
- During programme design the question should be not what will happen to beneficiaries if a risk is realised, but rather what will be the consequences when a risk is realised and if, and how, the programme will try and incorporate this;
- As well as ‘downside risk’ it is important to try and think through the ‘upside risk’; or the opportunities which certain risks may result in for particular groups.