Policy Briefs

Note on Development of Risk Appetite Framework at the GEF

Note on Development of Risk Appetite Framework at the GEF

This short note, intended to be read in conjunction with STAP’s recent advisory document entitled Risk Appetite and the GEF, provides a summary of key messages that emerged from consultations with several GEF agencies and external organizations regarding the process of developing a risk appetite statement and framework. With a focus on experiences particularly relevant to the topic of programmatic risk, the main messages are organized into three main findings, with detailed information and examples for each.

Consistent leadership is needed to reinforce the importance of risk appetite, build a culture of effective risk management, and strengthen incentives for innovation.

An effective development process includes structured deliberation, followed by planned roll-out and capacity support to embed the risk appetite framework in practice.

Key strategic choices will help ease the process, including a) what categories of risk will be the focus for risk appetite? b) what level of consistency in approach is expected? c) how much precision in measurement is planned? d) at what programmatic level will risk be assessed? e) how will responsibility be distributed?

Information in this note is intended to support GEF efforts to prepare a paper on GEF-8 programming risk framework for consideration by Council at its 64th session.