Managing risk key to sustainable development

IRIN: The World Bank in its 2014 World Development Report (WDR) launched on 6 October 2013 places risk management and resilience building at the core of its development approach.  "The process of confronting risks, preparing for them, and coping with their effects", WDR notes, offers an indispensable opportunity for growth, prosperity and development.

"The [WDR] report's focus on 'risk as opportunity' is symptomatic of sea change in the last two or three years, where risk-management investments have switched from being cast as some kind of additional burden one begrudges, to being integral to durable development and economic growth," says Tom Mitchell, head of the Climate and Environment Programme at the Overseas Development Institute (ODI), in an opinion piece.

"When food, fuel and financial crises combined in 2008 to cause sharp declines in economic growth within many developed economies, a tsunami of interest was unleashed in 'managing risk' through strengthening resilience, social-protection, shock facilities, food and nutrition security and early-warning systems, among others."

Indeed, WDR is explicit that "the risk of inaction may well be the worst option of all," and proposes that, "the solution is not to reject change in order to avoid risk but to prepare for the opportunities and risks that change entails."

In agriculture, farmers in developed countries use far more inputs such as fertilizer than those in developing countries, and consequently are more productive. The report argues that the difference in the use of such inputs can predominantly be explained by differing levels of aversion to risk. Many farmers in developing countries are not assured of a ready market or stable financing, and risk crop failure, and are therefore less likely to invest in production-enhancing inputs...

A flooded village in Bangladesh after a 1991 cyclone, US Air Force photo