Systemic Risk in Development Lending
ASRA and the Inter-American Development Bank (IDB) are working together to explore how systemic risk assessment and response can be applied within development lending contexts; helping multilateral development banks (MDBs) proactively manage interconnected global risks rather than react to crises. The project will result in a high-profile briefing paper and dissemination activities designed to drive systemic thinking across MDBs and other financial institutions.
This project is a collaboration between ASRA and the Inter-American Development Bank's Systemic/Multidimensional Risk Management (SRM) team.
The project has three core aims:
- The application of ASRA’s systems-based tool STEER (Systemic Tool to Explore and Evaluate Risks) to identify and analyze how risks interact across systems and sectors;
- Strengthening response mechanisms by using STEER to assess their relevance and effectiveness against systemic risk criteria;
- Developing recommendations for IDB and other MDBs to better anticipate, prepare for, and respond to systemic risks; supporting countries in strengthening institutional environments, building technical capacity, and navigating political economy challenges.
For MDBs like the IDB, systemic risks can directly impact development goals, financial standing, and regional operations. Traditional risk management focuses on single harms to single organizations or communities but systemic risks involve multiple, interconnected impacts that can be severe, abrupt, and long-lasting across both natural and human systems. As systemic risks grow in magnitude and frequency – from climate change and geopolitical instability to technological disruption and resource insecurity – MDBs must mainstream tools that enable them to recognize and respond to cascading, compounding risks.
By co-developing a practical briefing paper with IDB, this project will contribute practical evidence for how financial institutions can shift from reactive to proactive systemic risk management, providing a replicable model that other MDBs can adapt to protect development outcomes and strengthen long-term resilience in the regions they serve.
The paper is expected to be published in Q2 2026.
For questions or enquiries about this project, contact Ajay Gambhir: agambhir@asranetwork.org
