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Risk Sharing in practice: Success stories, enablers, and barriers to risk sharing in the humanitarian sector (June 2022)

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Published:
17 October 2022
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Risk Sharing in practice: Success stories, enablers, and barriers to risk sharing in the humanitarian sector (June 2022)

Executive Summary

Sharing similar objectives and collaborating in the same delivery chains requires common risk management approaches

Humanitarian action is primarily intended ‘to save lives, alleviate suffering and maintain human dignity during and in the aftermath of crises.’ However, when looking at the contexts where the 274m people most urgently in need of assistance are located2 , it becomes clear that providing this assistance is an inherently risky undertaking. Delivering humanitarian programmes therefore requires humanitarian actors to consider how best to balance the desire to achieve their objective of providing this support, with the various risks that pursuing their objective entails. Increasingly over the last decade, humanitarian actors have borrowed risk management approaches from the private sector that have helped them identify the inherent risks to their work. Humanitarian actors have similarly copied ways for framing their response to those risks, deploying response strategies for transferring, avoiding and reducing risk and accepting or (less frequently) sharing identified risks. This in turn allows the humanitarian actor to evaluate whether the risk that is left – what is described as residual risk – is of a level that they can tolerate and hence accept, allowing them to proceed with their work.

However, while the context for humanitarian action has become more complex, so too has the cast of humanitarian actors. A multitude of organisations with different mandates and performing different and often overlapping roles increasingly rely on one another to achieve their desired impact, but crucially with a shared objective – to support affected populations. Government donor bodies provide original funding in what could be described as a ‘Back Donor’ function, a plethora of UN agencies, Red Cross movement entities and NGOs receive funds that they then themselves disburse to other downstream partners working in an ‘Intermediary Donor’ function, while many of these same organisations and importantly national NGOs, Red Cross Societies and other local responders work in a ‘Direct Implementation’ function to deliver last mile assistance. These three functions are critical to what can be described as the ‘delivery chains’ in which humanitarian actors collaborate to provide assistance to affected populations.

The interconnectedness of humanitarian actors within delivery chains however does present a challenge for risk management. Whereas in the private sector, companies may have the same objective (i.e. to make profit) and can pursue that in competition with other companies, as described above, humanitarian actors have a shared objective (i.e. to support affected communities) which they must pursue through collaboration with other humanitarian actors. In this respect, risk management approaches that focus only on identifying and addressing risks to single humanitarian actors have a weakness. One humanitarian actor in a delivery chain can identify risks and respond to them with response strategies that seek to transfer, avoid or reduce the risk to their own organisation, which at first glance may appear to address the risk they face satisfactorily. However, this organisation-focused risk management approach can have the effect of transferring a risk to or generating a risk for another humanitarian actor elsewhere in the delivery chain. If that organisation is unable or unwilling to accept that risk, the delivery chain is broken and importantly, both actors fail to achieve their mutual objective. This paper advances the case that increased risk sharing poses a potential strategy to overcome this challenge.

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