For the world's poorest populations, risk is evident in everyday life. From negative weather events such as drought and flood to fluctuations in international financial markets, risk can take many forms and requires innovative global strategies to mitigate.
Agricultural risks, such as a loss of harvest (and thus, profit) from a negative weather event, pose one of the largest hurdles for the rural poor in developing countries. Because poor populations often lack access to functioning insurance markets, such risks go uninsured and result in even greater asset loss. Innovative programs such as weather-based index insurance are becoming increasingly recognized as a way to increase poor populations' access to and use of risk coping tools such as insurance. For more information about index insurance and other innovative risk coping mechanisms, see IFPRI's work on risk management
As seen from the recent global economic downturn, managing financial risk is another particularly daunting challenge. This is even more so for developing countries as a whole and for those countries' poor populations. As economies around the world become increasingly integrated, it is crucial for international financial regulations, standards, and policies to be integrated as well. The Financial Stability Board was created to bring together national financial authorities, international financial institutions, regulators and supervisors, and central bank experts in order to promote effective regulatory, supervisory, and other financial policies across the globe. This cooperation among national and international financial institutions can serve to mitigate global financial risk.
Read the progress report from the Financial Stability Board on risk-coping strategies called for by the 2011 G20.