This report highlights the relationship between poverty, risk and vulnerability facing the people of Afghanistan.The report is divided in to five chapters: Chapter I provides a short historical overview of poverty and vulnerability and highlights some of the ways in which the Afghan people have survived more than two decades of conflict, recurring drought and other natural disasters.Chapters II and III focus on livelihoods, poverty and vulnerability in rural Afghanistan where more than three-quarters of the Afghan population live.Chapter IV focuses on the same subject matter in the urban areas.The final chapter of the report outlines the policy directions for poverty reduction and suggests that the essential path for poverty reduction is sustained, equitable, broad-based economic growth, with the State playing the role of facilitator, regular and financier of high-return infrastructure and services but leaving provision largely in the hands of the private sector, communities and NGOs. The objectives of the report are (i) to gain a more in-depth understanding of poverty and vulnerability as experienced by different socio-economic groups; (ii) to examine the range of risk-management instruments (informal and formal) that are available and to better understand their effectiveness; and (iii) to suggest the parameters of a broad-based poverty reduction strategy.