Households in developing countries face high income variability due to various risks. They use strategies like savings and informal insurance to cope, as formal markets are not very helpful. Despite these efforts, vulnerability remains high, leading to fluctuations in consumption and potential poverty. Self-insurance through assets may not be as effective as thought due to risks. Policies promoting safer assets and savings could help households deal with income shocks better. Income smoothing through diversification is limited among poorer households.