In February 2024, the GEF Council adopted a GEF Risk Appetite that described the level of risk the GEF is prepared to take in its ambition to achieve global environmental benefits. The instructions to assess risk are: i) describe the nature of the risk to project outcomes; ii) identify relevant mitigating measures; and, iii) assign a rating to the level of residual risk.
STAP identified two issues that require clarification. First, there is sometimes confusion about distinguishing the nature of the risk, the mitigating measures, and the residual risk. Second, the framework introduces a new dimension of “Innovation risk”, for which many are unfamiliar with how best to interpret, describe, and assess its associated risk categories.
This guidance note addresses both issues and aims to assist GEF agencies and countries to ensure consistent and robust risk analyses in projects and programs. The primary audience is project developers and reviewers. The note is divided into three sections. Section 1 covers basic concepts, distinguishing the overall challenges the project aims to address from the risks that remain once a project design logic has been adopted. Section 2 focuses on Innovation risk, including the implications of the GEF Council’s decision to adopt a high appetite for innovation in support of transformational change. Section 3 illustrates the application of these concepts, with examples of completed risk tables for Innovation risk.
