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Risk Management

People face numerous risks over the course of their lives, such as employment loss, ill health, and poverty in old age. Social security systems were created because private insurance markets cannot offer effective protection against these risks on their own, especially for poor people.

Historically, access to social security has been tied to salaried employment. However in Latin America and the Caribbean, where many workers make frequent transitions between formal and informal employment, households are ill-protected against risks like employment loss and poor health. Also, a large part of workforce does not have access to pension plans, meaning that many people will not have enough retirement income to stay out of poverty in old age.

In the past two decades, many countries in Latin America and the Caribbean have enacted reforms to extend the coverage of social security. These reforms are challenging because they need to be systemic, rather than piecemeal; and because poorly designed reforms can hamper formal job creation.

Health systems face new operational challenges as countries confront a “double burden” of disease— a steep rise in chronic, lifestyle-related diseases, and a backlog of reproductive and communicable diseases, child malnutrition and anemia, all of which disproportionately affect the poor.These challenges place a serious strain on health budgets. 

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