Financing sustainable development: The critical role of risk and resilience

March 2016
Charlene Watson and Jan Kellett

In 2015, the United Nations Development Programme (UNDP) and the Swiss Government hosted a series of events around the financing of risk and resilience.This report is in part based on a set of key messages crafted from the work of a technical workshop featuring the involvement of experts from across the aid and financing worlds (see Annex II for participants). Subsequently, these messages were presented at a high-level meeting in New York and at the Addis FfD conference itself.

Elaborating on some of these messages, this report is designed to influence state actors, development finance practitioners and private sector stakeholders. Data and examples are used throughout for emphasis, but this report is not a comprehensive analysis of the various risks, and the requirements, for building resilience. It does however make the case that better risk management and the building of resilience are imperative for sustainable development.

With a growing recognition, in the post-2015 development agenda, of the need to build resilience to a broad suite of shocks, the necessary financing must be considered. It is imperative that this goes beyond
Official Development Assistance (ODA) or domestic public finance to include all future investments, ensuring that they do not lock-in or introduce risks. If the anticipated $90 trillion in infrastructure investment over the next 15 years is not driven by low-carbon and climate resilient choices, the pace of climate change – and vulnerability to it – could increase dramatically.

More remains to be done to ensure that all development finance (especially that spent in fragile and conflict-affected contexts) is risk-informed, and that financial flows adequately consider risks and build resilience. This report makes a case for financing that directly manages risk and builds resilience. It highlights that all forms of finance – including public and private, domestic and international – have a role in such an effort and demonstrates this through examples in key development themes.