How do the Poor Deal with Risk?

Abstract:

"This Briefing Note offers insight into the ways poor households manage risks. Based on the financial diaries research outlined in Portfolios of the Poor: How the World’s Poor Live on $2 a Day. This brief describes the formal and informal risk management tools used by poor households in Bangladesh, India and South Africa, and examines how these tools can be improved to help the poor mitigate risk and plan for the future. Dealing with emergencies means being able to pull together adequate financing at the right moment. The diary households used credit, savings and insurance, both formal and informal, to mitigate risk. The note also discusses some of the other aspects under the new ideas for helping poor households deal with risks – partial coverage, product design and beyond insurance.

Tags: Poverty line, Cash flow, South Africa, Stuart Rutherford, Microfinance, Market research (qualitative) , India, Bangladesh, Southern Africa, Portfolios of the poor, South Asia, MicroSave, Risk management, Irregular income