Remarks by Malaysia Country Director on World Development Report 2014–Risk and Opportunity

Assistant Governor Marzunisham Omar, Dato’ Steven Wong, Tan Sri Tan Sri, Dato Dato, Ladies and Gentlemen: A very good morning to everyone and welcome to this seminar on the World Bank’s latest World Development Report.

In recent years, the world has suffered a multitude of crises.

• Financial and economic turmoil disrupted the world economy, with a loss of income, jobs, and social stability.
• Massive natural disasters have devastated entire communities from Haiti to Thailand to Japan, leaving behind a trail of fatalities and economic losses.
• And the poor suffer the most—from financial crises and liimitations in access to credit, from droughts and floods, and from climate change risks as well.

How can we become more resilient to crises and shocks, and at the same time manage risk to fully take advantage of emerging opportunities? TheWorld Development Report 2014 (WDR 2014), Risk and Opportunity—Managing Risk for Development, seeks to provide answers to this question.

Pursuing opportunities requires taking risks. Risk-taking is the key to prosperity:

• Flexible labor markets are good for growth, but require accompanying risk management measures to be socially acceptable and fair.
• Opening markets brings up great opportunities, but implies risks for individuals and communities that may end up among the ‘losers.’

Now, many people, especially the poor and vulnerable, are often reluctant to take risks, because they fear the potential negative consequences. Yet, failure to act and take necessary risks can trap people, leave them vulnerable to shocks, and even less able to pursue opportunities that would otherwise improve their well-being.

The key is to manage risks effectively. The World Development Report 2014 demonstrates that effective risk management can be a powerful instrument for development. It can save lives, avert economic shocks, and help people build better, more secure futures. This report calls for individuals and institutions to go beyond “fighting crises”, take initiative, and become “systematic risk managers”. Recognizing , preparing for, and reducing risk can pay off abundantly. 

Consider Malaysia

• Malaysia revamped its management of macroeconomic, financial, and corporate risks after the Asian Financial Crisis of 1998. This paid significant dividends, and helped Malaysia navigate the recent Global Financial Crisis.
• There are other areas where Malaysia can take further action to manage risks:
  • With climate change an ever-present reality and leading to greater weather variability, improving water management and flood preparedness will remain important items in the agenda
  • Malaysia wants to boost entrepreneurship – I know that President Obama and Prime Minister Najib just opened the Malaysian Global Innovation and Creativity Centre this weekend. But entrepreneurship and innovation will only thrive when individuals can afford to take risks and fail

Risk can never be completely eliminated. But families, firms, and governments can do a great deal to reduce risks:

• Risk reducing energy, water, and transport investments and policies;
• Community-based prevention, education, and training;
• Insurance--health insurance; crop insurance; and natural disaster multi-country risk pooling (Pacific, Latin American; for Southeast Asia?)
• and effective regulation.

The World Development Report 2014 aims to synthesize worldwide research and countries’ experiences and good practices into a useful compendium that is easily accessible and well-referenced. It can be a valuable guide both for mainstreaming risk management into the development agenda, and for helping countries and communities strengthen their own risk management systems.

My hope is that the WDR 2014 will lead to risk management policies that allow us to minimize the danger of future crises, to seize opportunities for development, and to help realize a world free of poverty, with shared prosperity for all.

I would like to thank Bank Negara Malaysia for co-hosting today’s seminar.  I also want to thank Norman Loayza, the Director of the WDR 2014, for coming to Kuala Lumpur for this seminar. I hope all of you will find the seminar useful for your work, your organizations, and for Malaysia as a whole.

Termiah Kasih!