This paper introduces an innovation – CBM-lite – designed by a small Ugandan non-governmental organisation (NGO) to remedy the shortfall of operation and maintenance (O&M) funds, identified as the key explanation behind the poor sustainability record of the community-based management (CBM) model. Without a radical change in government and NGO policy concerning post-construction support, the financing of hand pump O&M must come from communities themselves: hence the user pays principle is fundamental. CBM-lite aims to reduce hand pump downtime by replacing the voluntary water user committees with an incentivised water operator bolstering the user pays principle, and through an insurance-style micro-finance product that ensures funds are available for expedient repairs. This innovation refines organisation and governance arrangements of CBM, but as the rules of operation and enforcement of sanctions are communally arranged, remains within the existing institutional framework of CBM. Drawing on original and extensive ethnographic fieldwork, surveys and interviews, we argue that a relational reading of risk applied to an innovation that deviates from mainstream CBM goes some way towards explaining the intransigence within the rural water sector. This novel application of relational risk theory advances the conceptual and empirical contribution of geography to the conundrum of realising sustainability in the rural water sector. The known risks associated with CBM – a third of hand pumps being non-functional at any one time – may be seen as preferable to potential harm to ideology, to policy coherence, to organisational reputation, and to social and cultural norms. Finally, the study reconsiders current views about rural water management – notably the actual level of support for the user pays principle, key to both CBM and CBM-lite. Unpacking sectoral inertia assumes greater significance with estimates that 57% of the global population will be reliant on communally managed water sources by 2020.