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World Development Report 2014
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World Development Report 2014

Risk and Opportunity: Managing Risk for Development

The World Bank
World Bank, 2014
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Recommendation

The World Bank conducted extensive research and synthesized a lot of information to determine the routes to effective worldwide risk management. This report cites optimal actions governments can take to control public risk and shows how proactive risk management reduces the cost of coping with the aftermath of crises and leads to post-shock economic development opportunities. The analysis contains abundant case studies, detailed text, risk-themed graphics and an extensive bibliography. getAbstract recommends this valuable report to investors, bankers, nongovernmental organizations, policy makers, students of government, finance and economics, and those responsible for dealing with what might happen the day after tomorrow.

Summary

The Power of Risk Management

Whatever its size or origin, a crisis can have a physical, economic and emotional impact. A lack of planning for potential crises is its own hazard, the “risk of inaction.” When planning is in place, it can focus on post-crisis action. The optimum approach is proaction, an orderly attack on the risk situation. For instance, Bangladesh’s 40-year shelter-building initiative – which increased the number of shelters in the storm-prone state from 12 in 1970 to 2,500 in 2007 – lowered its cyclone death rate by 98%. “Macroeconomic preparation” in the Czech Republic, Kenya and Peru effectively defended their economies from the financial meltdown of 2008. Risk management stimulates economic development opportunity. For example, farmers in Ghana and India who secure rainfall insurance can afford to take such risks as investing in fertilizer, seeds or other materials.

Prevention costs are often far less than the costs of a crisis; that is, prevention generally is cheaper than cure. For instance, giving mineral supplements to the malnourished staves off famine and “may yield benefits at least 15 times greater than the cost of the program.” Weighing...

About the Author

Established in 1944, the World Bank provides financial and technical assistance to developing countries. It works with member nations to fight global poverty.

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