"The capacity of individuals, households and communities to handle risk and the appropriate risk management instrument to be applied depend on the characteristics of risks: their sources, correlation, frequency and intensity. The sources of risk may be natural (for example, floods) or the result of human activity (for example, inflation resulting from economic policy); risks can be uncorrelated (idiosyncratic) or correlated among individuals (covariant), over time (repeated) or with other risks (bunched); and they can have low frequency but severe welfare effects (catastrophic) or high frequency but low welfare effects (non-catastrophic). The main sources of risk and the degree of covariance can range from purely idiosyncratic (micro or individually specific), to regionally covariant (meso), to nationwide covariant (macro) events.”
Source: Holzmann, R. 2001. “Risk and Vulnerability: The Forward Looking Role of Social Protection in a Globalizing World”. Washington, DC. The World Bank. < https://documents.worldbank.org/en/publication/documents-reports/documen.... Accessed 13 August 2020.
