© Finance for Peace 2023
Risk mitigation measures are crucial components in any peace-positive investment strategy. These measures are designed to identify, assess and prioritise risks. This needs to be followed by minimising, monitoring and controlling the probability or impact of possible adverse events, or, maximising opportunities. In the context of peace-positive investments, risk mitigation plays a pivotal role in preventing the exacerbation of conflict and promoting sustainable development.
One notable example of a risk mitigation measure in action is the implementation of social dialogue with local communities. This approach has been demonstrated to be highly effective in mitigating risks associated with investment projects. For instance, it was found that by engaging in thorough stakeholder mapping, local community consultations and needs-based community development programmes, investors could significantly reduce potential conflicts. Such engagement helps to secure local buy-in, mitigating risks such as disputes between investors and communities.
By investing time and resources in understanding and addressing the needs and concerns of local stakeholders, investors can avoid delays and additional costs, estimated in some cases to range between USD 25 to USD 40 million. This strategy emphasises the importance of prioritising long-term peace and stability over short-term profit maximisation, ensuring that investments contribute positively to the social fabric and resilience of communities.
In short, risk mitigation measures are essential in peace-positive investments, helping to create an environment where economic growth and community wellbeing are aligned. Through strategies such as social dialogue and community engagement, these measures ensure that investments are not only financially sound but also contribute to the overall peace and stability of the areas they impact.