| Abstract: |
This paper reviews some literatures on the mechanisms available for the poor
in managing risk. Lacking access to formal mechanisms of risk management, the
poor rely on informal mechanisms, which are built based on the existing social
networks and trust. But when the shocks are big or affecting the entire
community, these informal mechanisms may not be adequate. Some policy
interventions are then required to help improving the ability of poor people
in managing risk. Policy intervention should aim to provide access for the
poor on saving, credit and insurance. Microfinance schemes have been applauded
as a successful ‘best practice’ in providing access to saving and credit.
However, microfinance institutions still have some room for improvement by
expanding their role in providing insurance schemes. |