The Global Environment Facility (GEF) aims to embrace more calculated risks in its efforts to achieve transformative environmental outcomes. Currently, the GEF portfolio has a low to moderate risk profile. The majority of projects in the portfolio are categorized as low-risk and have generally yielded satisfactory outcomes. Figure 1 shows the distribution of closed projects based on their risk and outcome ratings, with the largest concentration of projects centered around low-risk projects with satisfactory outcomes. High-risk projects with at least marginally satisfactory outcomes constitute a small portion of the portfolio. Additionally, a shift towards higher-risk projects over time has not been discernible thus far in closed GEF projects.
In its 66th meeting, the GEF Council approved a risk appetite document aimed at providing guidance to agencies on undertaking and navigating calculated risks. The document reflects ambitious goals for the GEF’s risk management approach. However, to foster a cultural shift to deliberate risk taking in pursuit of greater global environmental benefits, it is crucial to clearly articulate the desired risk level for the portfolio, define risk tolerance, and establish clarity on risk ownership. Changing the risk profile of GEF-funded projects will also require risk management within the GEF.