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Exposure to risk may be seen as one of the many dimensions of poverty. Household exposure to risk consequent upon
different types of shocks often leads to undesirable welfare outcomes. A shock can push an already income-poor household
further into poverty or drive a non-poor household below the income poverty line. Risk appears to be one of the major
challenges many households face in developing economies especially in the Sub-Saharan Africa. As a result, these issues have
become central in the policy agenda not only in these countries but also in the international multilateral institutions. This
study examines the exposure to risks in urban and rural areas and its effect on household vulnerability to poverty in Nigeria.
The study applied the framework that computes vulnerability as expected poverty on the Nigeria General Household Survey
for 2015 and the cross-sectional data and three-stage feasible generalized least squares analysis were employed. Findings
show that exposure to risks such as job loss, business failure, harvest failure, livestock death, dwelling demolition, increase
and decrease in input and output prices, and other similar risks significantly drive households into poverty but differ across
households in rural and urban areas, both in characteristics and regions. These findings suggest that social safety nets should
be designed to take care of not only the current poor households but also the non-poor households who are likely to be
vulnerable in the future.
