Through its strategies SRM aims to reduce the vulnerability of the poor and encourage them to participate in riskier but higher-return activities in order to transition out of chronic poverty.
Strategies to prevent or reduce the occurrence of income risks have a very broad range varying from small-scale informal arrangements to national economic policies.
The government has an important role in assisting people in coping, for example, in the case where individual households have not saved enough to handle repeated or catastrophic risks.
Individuals may have been poor for their entire lifetime with no possibility to accumulate assets at all, being rendered destitute by the smallest income loss and running the risk of being faced with irreversible damages.
The main forms of coping consist of: In coordination with national governments of Togo[11] and Yemen,[12] World Bank conducted two feasibility studies of the social risk management framework.
Its aim to encourage riskier activities that reap higher returns has also come under fire in light of individual risk-taking behaviors that are determined by a multitude of factors and not just decreased risk vulnerability.