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Concept
Social risk management
Summary
Social risk management (SRM) is a conceptual framework developed by the World Bank, specifically its Social Protection and Labor Sector under the leadership of Robert Holzmann, since the end 1990s. The objective of SRM is to extend the traditional framework of social protection to include prevention, mitigation, and coping strategies to protect basic livelihoods and promote risk taking. SRM focuses specifically on the poor, who are the most vulnerable to risk and more likely to suffer in the face of economic shocks. Through its strategies SRM aims to reduce the vulnerability of the poor and encourage them to participate in riskier but higher-return activities in order to transition out of chronic poverty.
Social protection has been a part of OECD economies for a long time but it has not played much of a role in development work because the imitation of these measures in developing countries is criticized based on equity and efficiency trade-off arguments. This view changed as a result of the following policy, conceptual and institutional triggers that led to the creation of SRM as a new social protection framework:
The East Asian economic crisis in 1997 revealed the volatility of high growth rates in the face of negative economic shocks. Moreover, informal social safety net arrangements and public support programs were shown to be inadequate under those circumstances.
Globalization has led to higher income variability, which together with marginalization and social exclusion leaves major groups like women and ethnic minorities highly vulnerable. Also, higher mobility of factors of production has reduced government ability to raise revenue, pursue independent economic policies, and to have national policies to help the poor when they need them the most.
Fulfillment of World Bank's mission to reduce poverty requires a deeper "understanding of the nature and characteristics of poverty" itself. Research in this area exposed the long-term negative consequences of seemingly transitory shocks and suggested the need for a preventative view of poverty based on vulnerability.
Official source
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