Effective risk management can provide both resilience to withstand risks and the ability to pursue development opportunities, the World Bank said in a report on Sunday.
In the face of social unrest, economic crisis and more frequent natural disasters, preparation work and recovery efforts by governments, communities, and individuals have become increasingly essential, the World Bank said in its World Development Report 2014 (WDR 2014).
Managing risks responsibly and effectively can save lives, avert economic damages, prevent development setbacks, and unleash opportunities, said the report.
"We're advocating a sea change in the way risk is managed. Our new approach calls for individuals and institutions to shift from being 'crisis fighters' to proactive and systematic risk managers," said World Bank President Jim Yong Kim.
The report pointed out that most ill-equipped individuals have to depend on shared action and responsibility at different levels of society to confront risks.
"Although people's own efforts, initiative and responsibility are essential to manage risk, their success -- in terms of resilience and prosperity -- will be limited without a supportive environment," said WDR Director Norman Loayza.
The report also noted that the benefits from preparing for risks can significantly outweigh the costs. For example, mineral supplements designed to reduce malnutrition may yield benefits 15 times greater than the costs.