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When a natural disaster strikes, it takes its toll in lives, homes, and entire cities. What’s more, the costs of reconstruction are not strictly financial—it can also drain other resources geared toward long-term development outcomes such as capacity building, and food and nutrition security. Despite the outpouring of financial aid that often follows major catastrophes, the slow and unreliable funneling of those funds does little to help those directly affected and, in fact, hurts long-term development by redirecting resources from effective programs.

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.

Risk characterizes everyday life for many of the world’s poorest households. These households are more likely to be located in environments where livelihoods are highly susceptible to weather and price variability and where health risks are pervasive. Reducing the risks faced by poor households, and enabling poor households to better deal with adverse events when they do occur, is essential to improving their welfare in the short run and their opportunities for income growth in the long run.