Managing Risk in the Program Cycle

USAID and implementing partners face many crises and uncertainty around the world. Our core mission and our role in supporting U.S. foreign policy requires that we work in a wide range of environments, and we are called upon to make risk-intelligent decisions to deliver foreign assistance. Integrating risk management to our everyday work minimizes the risks posed to the Agency and our partners while ensuring desired development outcomes.  

USAID’s Risk Appetite Statement (RAS) provides broad-based guidance on the type and level of risk the Agency is willing to accept to achieve its mission. Originally drafted in 2018 and updated in 2022, the RAS defines the Agency’s risk appetite in eight categories, including Programmatic/ Development Outcome risk. USAID defines risk as the effect of uncertainty on objectives. Uncertain situations present challenges that threaten the realization of objectives, but they may also create opportunities to amplify development outcomes. 

The Bureau for Planning, Learning and Resource Management (PLR), in partnership with the Office of the Chief Financial Officer (M/CFO) that coordinates USAID’s Enterprise Risk Management (ERM) program, has developed a “Managing Risk in the Program Cycle'' Brief and a suite of tools to systematically manage risk using existing Program Cycle processes. 

The “Managing Risk in the Program Cycle'' approach creates awareness of risks and opportunities throughout the Program Cycle phases, and what both USAID and implementing partners can do about them using existing processes. Based on consultations conducted within USAID, it was clear that the Agency’s risk-averse culture prevents a more balanced approach to risk. As such, in addition to developing  tools, USAID intends to start building an enabling, supportive environment that encourages disciplined risk taking. Brief Version 1 jumpstarts this effort. It is a living document to be improved iteratively with context-specific experiences and our collective learning on risk management. 

We look forward to hearing from USAID colleagues and implementing partners. Please share your experience and lessons learned in managing and calibrating risk (as a threat or an opportunity), recommend tools to include in our toolbox, and tell us what support you need. Please send all comments and enquiries to [email protected].