In this paper we review the historical relationship between the work of applied economists and policy makers and the institutions that came to characterize the commodity and risk markets of the 1980s. These institutions were a response to the harmful consequences of commodity market volatility and declining terms of trade. However, the chosen policies and instruments relied on market interventions to directly effect prices or the distribution of prices in domestic and international markets. For practical and more fundamental reasons, this approach failed. We next discuss how a growing body of work contributed to a change in thinking that moved policy away from stabilization goals toward policies that emphasized the management of risks. We distinguish between the macroeconomic effects of volatile commodity markets and the consequences for businesses and households. We argue that both sets of problems remain important development issues, but argue that appropriate policy instruments are largely separate. Nonetheless because governments, households and firms must all respond to a wide range of sources of risk, we emphasize the role for an integrated policy by government.