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Risk and Opportunity – A Public Policy View of the World Bank’s 2014 World Development Report

The 2014 WDR examines “managing risk for development.”  Risk (i.e., the probability of loss) pervades all economic and social activity.  To develop, individuals and societies need to seize opportunities. These are always risky.  The WDR argues that decision makers are not well-prepared to handle contemporary risks (financial turbulence, epidemic diseases and weather-related emergencies).  Risks should be managed in a “pro-active, systematic and integrated way etc.” The WDR presents an “analytic framework for risk management” for decision makers to identify, respond to, and cope with risks and offers “five principles of publication for better risk management.” They are as follows:

  • Do not generate uncertainty or unnecessary risks;
  • Provide appropriate incentives for risk management planning;
  • Keep a long-run perspective;
  • Enhance flexibility within a transparent/predictable institutional framework; and
  • Protect the vulnerable, while encouraging self-reliance and preserving fiscal sustainability.

Each of those principles is directly relevant to the research being undertaken by LMPPI.  Several of them were examined.