Risk Management Products
Poor and low-income households in developing countries have few safety net mechanisms to rely on, and thus tend to be more vulnerable to shocks. These shocks can range from an accident, illness, or the death of a family member to HIV/AIDS, to external covariate shocks such as natural disaster or conflict. Financial services can help clients to maintain a consistent income stream, to build a savings base that could be used to cover emergency expenses, and to insure productive assets such as land, livestock or equipment that would otherwise be liquidated and further undermine the household’s ability to recover from the shock.
The USAID Microenterprise Development office’s activities under this theme include guidance, tools, and approaches for understanding the demand of clients for financial products—savings, insurance, and remittances—that could help households mitigate their risk and prevent the depletion of their assets in the case of shock. Resources on these pages also help to inform microfinance institutions and USAID staff on current and potential models for delivering these products.