A wide range of shocks, from extreme climatic events to financial crises and pandemics, threaten people’s livelihoods, food security and nutrition across Latin America and the Caribbean (LAC). The year 2020 illustrates these challenges clearly, with countries experiencing a combined impact of the COVID-19 pandemic - a major crisis that is leading to the most severe contraction in the region’s historical economic activity - compounded by major weather events including hurricanes Eta and Iota that hit Central America in November 2020. These shocks disproportionately affect poor and food-insecure communities.
Risk finance is an important tool in support of the mandate of the World Food Programme (WFP) to both save lives and change lives. It helps equip governments, communities and individuals with a range of financial instruments that provide timely resources to people so they can confront the financial and food security impacts of shocks. Financial services also contribute to wider resilience outcomes when developed to be inclusive. For governments, designing these instruments to be connected to social protection systems so that they are more shock-responsive is increasingly being seen as a cost-effective measure to channel finance to affected populations.
WFP globally has been a lead proponent of promoting risk finance as a piece of the puzzle for integrated risk management approaches. The Latin America and Caribbean region offers a series of opportunities to sustainably scale risk finance solutions to support the region’s most vulnerable and food insecure.