1 Introduction

1.1 Background

Compounding crises threaten development gains. The impact of a single shock – an earthquake, a food crisis, or a disease outbreak – can amplify existing stressors or potentially initiate a cascade of shocks, leading to larger and more sustained impacts on lives, livelihoods, and ultimately development outcomes. With the potential to cause significant economic impacts, compounding risks can hinder progress in poverty reduction, especially in low-income and fragile countries.

Understanding different types of risk and their interactions is therefore essential to supporting risk-informed development. Despite this, risks are often assessed and monitored in isolation. This can lead to an incomplete understanding of risk, how it materializes and where it is concentrated. It can also lead to large biases in estimates of the probability and severity of compounding shocks.

The World Bank is working to enhance its ability to identify, monitor and address risks holistically across sectors and geographies. As part of this effort, the GCRP was endorsed by the Board in 2018 as an institutional mechanism to improve the way the Bank tracks and manages crisis risks to: (i) promote risk-informed investments to support crisis prevention and preparedness; and (ii) strengthen institutional capacity for early response, especially where a combination of shocks amplifies impacts or spills across borders. 

The CRM presented in this note supports the vision of the GCRP by providing a tool to enhance the World Bank’s institutional capacity to prepare for, and respond to, complex crises that threaten the organization’s twin goals of ending extreme poverty and boosting shared prosperity.

1.2 Objectives and vision of the CRM

The CRM is an early warning system to track compound risk at the country-level, drawing on a wide range of pre-existing risk databases and indices. It identifies countries experiencing changing risk conditions across multiple dimensions of compound risk and serves as an aggregator of wider WB risk analyses. The CRM allows easy identification of ‘hotspot’ areas: countries and regions where multiple compounding threats may substantially set back progress on economic development and poverty alleviation. To do so, the CRM tracks interactions between six dimensions of compound risk – ranging from food security to disease outbreaks. These can be seen as preconditions (or catalysts) likely to contribute to further compounding effects.

Using grouped indicators across each of the six risk dimensions, the CRM provides three country-level risk outlooks. The first is a gauge of a country’s underlying level of vulnerability (“Underlying Vulnerability”). It is a static overview of a country’s predisposition to specific threats, typically based on an evaluation of structural conditions and underlying capacities related to each risk dimension. The second is a measure of changing risk conditions (“Emerging Threats”). It signals countries that are experiencing (or are expected to experience) worsening/intensification of risk conditions. The third is a combined score that weighs emerging threats against a country’s underlying vulnerability (“Overall Compound Risk”). This combined measure should be seen as a high-level approximation of the vigilance needed in monitoring and responding to changing risk conditions in a given country – noting the limitations of combining two measures that do not share identical indicators or thresholds.

1.3 Target audience and use cases

The primary target group for the CRM is World Bank senior management, as well as IDA management. The CRM provides decision-makers with a high-level overview of compound risk through systematic updates on underlying vulnerabilities and emerging threats globally. By flagging potential compounding risks at global and regional levels, it draws attention to areas that require increased vigilance, and helps support anticipatory decision making. The information produced by the Monitor can serve as an input into portfolio-level discussions at the global and regional level. Specifically, this will support the GCRP’s function as institutional platform to support the monitoring and response to complex crises envisioned in the GCRP Board paper.

Beyond management, technical and operational staff across the WB can benefit from the CRM in their dialogue with clients and partners on risk management.

  • At the corporate level, the CRM can supplement existing corporate risk management tools and processes by identifying emerging areas of complex crises requiring senior management’s attention. Current corporate risk management processes rely on bottom-up identification and escalation of risks from the project-level, while the CRM can provide a top-down view of emerging threats and changing contexts in client countries. As such, the CRM can be used as an input into OPCS’s Integrated Risk List or Pipeline Risk and Corporate Review processes.

  • At the regional and country level: While the CRM is not a substitute for local expertise, especially in the context of countries that are already experiencing protracted crises, Country Management Units (CMUs) and task teams may benefit from CRM outputs in a number of ways. First, the tool can help them identify emerging threats in operations and their potential impact on project outcomes. Emerging threats scores can serve as a trigger for task teams to explore secondary risks that will likely emerge and impact the achievement of the project development outcomes. It can prompt early thinking by task teams on mitigation measures to minimize the impact of these risks on project results. In addition, regional and country teams can use the CRM during project design to inform the ambitiousness of results being pursued given the compound risk context of the country’s operating environment. The CRM can also inform regional and country context related to compound risk during the design of strategic processes such as Country Partnership Frameworks (CPF) and Systematic Country Diagnostics (SCD). Key statistics from the CRM can for instance be extracted to understand how countries in a specific region are faring compared to neighboring countries/regions. Lastly, the CRM provides enough flexibility to access the underlying data at a disaggregated level, separating underlying vulnerability from emerging threats, should enable CMUs and task teams to apply their own aggregation methods. As such, the CRM can be used as a clearinghouse for data from detailed sectoral assessments and monitoring tools.

To respond the diversity of needs of the above-mentioned end users, the tool will be deployed through a phased rollout. The team plans to start roll out of the tool at the corporate and regional level to further refine the methodology and outputs to meet the needs of Senior management, Regional management and corporate teams. Learnings from this initial phase would then inform engagement with on additional use cases at country and project level. For instance, (i) at the country level, the CRM could be deployed in selected high risk countries entering a new CPF programming cycle, and (ii) at project level, task teams could use the CRM in pilots of operations under preparation and implementation to see how this could inform the design and mitigation for better results. Building on user experiences at all these levels will help in further refining the tool.

Across use all cases, it is important to remember that the CRM is not designed to be a turnkey solution. It is a decision-support tool that will be complemented by nuanced qualitative assessments from WB experts. Combining the data-drive outputs of the CRM with a qualitative assessment (through regular horizon scanning meetings) will help ground-truth its outputs, reflect latest developments not captured in the data (i.e. political economy developments), and explore the different likelihood and potential impacts of key risk dimensions.

While access to the CRM will be limited to Bank staff, limited external applications could be considered going forward. As an aggregator of risk information and analyses, the CRM can serve as a public good for risk analysts and practitioners. Going forward, and based on guidance from management, the team may consider making parts of the tool available to a non-Bank audience, likely through an adapted version that excludes any sensitive outputs. This could leverage an ongoing technical collaboration with external partners working on compound risk monitoring, including UN-OCHA, UN-PBSO, UK FCDO and the Centre for Disaster Protection among others.

1.4 Development of the CRM

Development of the CRM was led by the Secretariat of the GCRP, housed in the WB’s FCV Group, in collaboration with the Crisis and Disaster Risk Finance (CDRF) team of the Finance, Competitiveness and Innovation (FCI) Global Practice. In addition, the CRM builds on and benefits from risk analytics produced by a number of key World Bank teams and external partners.

Throughout the development of the CRM, the core team has worked closely with experts across the Bank, including Climate Change, GFDRR, DEC, AGF, FCI, MTI, HNP, POV and FCV. Where available, the CRM builds on analytical work on different risk dimensions conducted by Bank teams. In addition, the team was able to draw insights from a technical collaboration with a growing community of partners developing similar compound risk monitoring tools, including the United Kingdom Foreign, Commonwealth and Development Office (FCDO), UK Met Office, United Nations Office for the Coordination of Humanitarian Affairs (UNOCHA), United Nations Department of Peacekeeping Operations (UN-DPKO) and Centre of Disaster Protection.2

1.5 The GCRP Compound Risk Monitoring & Analytics Program

The CRM is part of a suite of related risk monitoring activities under the GCRP Compound Risk Monitoring & Analytics Program (P173164). These include:

  1. An interactive dashboard that will visualize outputs from the CRM, allowing users to quickly identify global hotspots and compare risk profiles across countries (See Box 1). This will be the most direct way for users to interact with the CRM and serves as a gateway platform. The dashboard will also allow users to adjust aggregation methods used in the CRM in accordance with their own preferences and user interests.

  2. A periodic horizon scanning exercise that will bring together WB experts to discuss short to medium-term compound threats building on the outputs of the CRM and expert sectoral inputs.

  3. A series of retrospective country diagnoses that will examine countries recently exposed to multi-risk threats, identifying early signs and indicators that could have retro-reactively alerted decision makers to the crises that followed.

  4. A set of forward-looking country case studies. These will focus on a select number of countries identified by the CRM as highly prone to emerging compound risks. The case studies will provide valuable insight into the entry points for future GCRP-related risk monitoring activities.

All four activities will feed directly into continual improvements to the CRM. In addition, the team will continue to actively engage with key technical partners within and outside the WB to leverage the results of relevant analytical work on risk assessment and impact estimation in refining the CRM.

Box 1: The CRM interactive dashboard

Information from the CRM will be presented and visualised through an interactive dashboard. The dashboard allows users to tailor information in the CRM database to their particular needs, homing in on specific dimensions, countries or regions of interest. More importantly, the dashboard enables the users to unpack results of the CRM and understand what indicators and trends are driving high risk scores. Access to the dashboard, which is currently in prototype phase, will be limited to Bank staff given the inclusions of proprietary data and the potential sensitivity of the information presented.

The dashboard is built around a global map profiling the geographic spread of compound risk within the CRM. Users are able to toggle between scores for underlying vulnerability, emerging threats and overall alert flags, and can also isolate individual risk dimensions.

Note that data showed in the prototype dashboard does not match the current CRM database

Users can also click on countries of interest to access insights into country-level risk profiles (see Annex Figures 10–13). Here you can view scores for individual indicators, understand core drivers of changing risk conditions. Country pages will also direct users to relevant risk information and resources across the Bank and from external partners.

Additional sections allow users to probe the regional distribution of risk flags – highlighting the total population (and proportion) affected by different risk categories in each region. The dashboard also enables you to download all data inputs underlying the CRM for further analysis.

  1. Together these partners are organised as a community of practice, seeking to promote knowledge sharing and advocacy in support of monitoring compound disaster risk within development and humanitarian organisations.↩︎