It is clear that the world has made very significant progress on development in the last decade or more. Poverty is declining, more children are in school. More people are receiving healthcare, energy and government services. And yet at the same time these gains are often frail and, in many contexts, particularly the more fragile, progress is set back by shocks and crises; political strife, droughts, community conflict, a pandemic, and more.
Risk-informed development is the construction and delivery of a development pathway that incrementally insulates progress from these shocks. In the most recent report UNDP has produced with partners at the Oversees Development Institute (ODI), we attempt to unpick what is an incredibly complex set of processes.
The starting point is to understand that exposure to risk and development are not separate, but essentially the same thing viewed from different angles. We cannot separate long-term improvements made in communities’ standards of living from the threats to those improvements. Development itself is not linear, interrupted by these shocks, but rather a much more complex trajectory. This understanding is critical to moving forward, because if we place risk at the centre of development, we can progress and that development increasingly informed by those risks, and shock proof.
This is made somewhat more complex by how many risks there are, whether social or political, security and conflict, health or technological, all of which exist in the same context. Our report picks out just how important some of the shocks driven by these risks are to developing countries: cybercrime in Africa; ongoing conflict in 48 countries; the financial crash of 2007 and 2008; climate change and sea level rise; and much more. But more than the actual impact of each shock is the relationship between risk and shock in the same country: piracy and lack of government control in Somalia; pandemic and financial instability in West Africa; Mali’s war economy, drug trafficking, people trafficking; the coming together of environmental crime and illicit finance. It is increasingly obvious how shocks are not driven by a particular factor, but more often a complex mix of different hazards and risks.
These complexities are not however limited to developing countries. Richer nations also suffer from multiple and complex shocks, and there is often rather uncomfortable and unhelpful rhetoric that the complexity of risk, shock and development only exist in developing countries. Yet of course there are differences, and perhaps the critical points are the greater severity and frequency of shocks in developing countries, and the greater potential for one shock to inform another. And then secondly, the role that stronger governance plays in mitigating risks and the shocks that can result.
A final point is that we know, throughout history, the world has faced changing threats, risks and shocks. The challenge for today’s decision makers, national and international, public and private, is that with human systems more connected than ever before, previous socioeconomic trends are interacting with new development dynamics and emerging global threats more rapidly than ever before, crossing borders of all kinds.
So what does this mean for development? In our report we argue for development to be fully cognizant of the risks central to countries, and to plan accordingly. Capacity and expertise in examining and analyzing many risks is a key starting point, together with building capacities of institutions to manage multiple risks and shocks, strengthening data collection, monitoring and evaluation and, most importantly, integrating considerations of multiple risk into all long-term development processes.
We have a long way to go to before we can be comfortable we have made sufficient investments in these critical approaches, to truly ensure that development is risk-informed. To give it a different spin; we know that there is an investment gap of more than US$2 trillion a year in developing countries, if the Sustainable Development Goals (SDGs) are to be delivered. This will only be reached through large-scale investment. And the two defining reasons why large-scale investors steer clear of developing countries, are issues of yield, of profit, and secondly, risk.
However you look at it, SDGs are in grave doubt unless we risk-inform development.