HOUSEHOLD RISK MANAGEMENT Using Financial Services for Risk Management

ROLE OF HOUSEHOLD IN RISK MANAGEMENT

Being together in good and bad

times

Taking care in old age

Increasing labour supply

after an income shock

Putting in extra work hours in

case a working member is sick

Household members can help one another manage risk and pursue opportunity

TYPES OF RISKS FACED BY HOUSEHOLDS

➤ Income

➤ Health

➤ Natural disasters

➤ Death of earning member

EXAMPLE OF RISK MANAGEMENT BY HOUSEHOLD

Evidence on living arrangements in 17 developing countries shows that on average 28 percent of households have members over the age of 60, a signficantly higher

share than this age group represents in the total population

In China, 90 % of elderly with disabilities living with their families have access to support, compared

with 73 % of elderly living alone

Elderly People Frequently live with other family members

Source: Page 112, WORLD DEVELOPMENT REPORT 2014

BARRIERS TO HOUSEHOLD RISK MANAGEMENT

Lack of awareness

Low levels of coordination

between family members

Low levels of education and

skill base

Discrimination of one member /

gender

Lack of access to resources due to socio-economic

reasons

SOME EXAMPLES OF BARRIERS TO RISK MANAGEMENT

Source: Page 117, WORLD DEVELOPMENT REPORT 2014

SOME EXAMPLES OF BARRIERS TO RISK MANAGEMENT

Source: Page 117, WORLD DEVELOPMENT REPORT 2014

SOME EXAMPLES OF BARRIERS TO RISK MANAGEMENT

Source: Page 121 WORLD DEVELOPMENT REPORT 2014

USING FINANCIAL SERVICES TO MANAGE RISK

Savings

Loans Insurance

Pension

USING FINANCIAL SERVICES TO MANAGE RISK

SavingsSaving for planned and unplanned expenses

Planned e.g. School fees, business expenses, marriage Unplanned e.g. death and funeral, medical expenses, job loss

Loans Loans for consumption smoothening or for starting / expanding micro-enterprise

Insurance Insurance to protect against unforeseen events such as death, health issues, and crop failure

Pension Pension schemes to save specifically for old age and related expenses

FINANCIAL INCLUSION: STATUS

According to the World Bank Global Findex database 2014:

According to the World Bank Global Findex database 2014:

FINANCIAL INCLUSION: WOMEN ARE MOST EXCLUDED

BARRIERS TO USAGE OF FINANCIAL SERVICES

Lack of knowledge about the services

Lack of access to affordable financial services

Low levels of usage and access issues for women

Lack of stable incomes

THANKS!