Community-based risk management arrangements : an overview and implications for social fund programs

Risk and its consequences pose a formidable threat to poverty reduction efforts. This study reviews a plethora of community-based risk management arrangements across the developing world. These types of arrangements are garnering greater interest in light of the growing recognition of the relative prominence of household or individual-specific idiosyncratic risk as well as the increasing shift towards community-based development funding. The study discusses potential advantages (such as targeting, cost, and informational) and disadvantages (such as exclusion and inability to manage correlated risk) of these arrangements, and their implications for the design of innovative social fund programs.