Risk-informed Finance

A lesson from the COVID-19 pandemic and the growing climate crisis is that development that is not risk-informed is neither inclusive nor sustainable. In light of this increasingly complex risk landscape, The 2021 Financing for Sustainable Development Report calls for a risk-informed approach to sustainable finance, and for investments in prevention, risk reduction and resilience. Because many such investments have a public good character, Governments must take the lead: incorporating risk analysis into their planning processes; overcoming ex post biases in their budgeting; aligning the private sector risk landscape with SDG risks, through carbon pricing and other incentives and regulations; and advancing risk-informed development cooperation in all its forms. Ultimately, all financing must be risk-informed and resilient, and sufficient financing must be available for investments in risk reduction and resilience, at national and global levels.