As James Wolfensohn, the Australian-born former investment banker, starts his second term as president of the World Bank, he may be wondering whether he is in for another five-year roller-coaster ride.

During his first five-year term, he initiated yet another internal reorganisation of the bank, stirring up the institution, some felt, to little effect. He introduced a holistic approach to development at the bank that critics claimed included so many priorities that it provided little practical guidance to staff.

The bank was used, against his wishes, to shovel money into countries across Asia facing severe financial crisis. It faced repeated calls for its abolition from non-government groups declaring that 50 years was enough and this year the Meltzer commission of the US Congress also urged it to abandon lending and reinvent itself as a provider of grants.

He also took the bank into territory where it had only ventured tentatively in the past. For the first time, the bank began to raise issues - such as corruption - that had previously been taboo.

The motivation for this was twofold. It was in part a response to the recognition that issues such as the quality of government were central to development and not peripheral political matters. But it also reflected the growing influence of non-governmental organisations (NGOs) in powerful creditor countries.

However, in taking the bank into these areas, Mr Wolfensohn has complicated his own task and that of his staff.

It brought neither him nor the bank much respite from the criticism of the NGOs. After allowing him an early honeymoon, non-government groups have resumed their attacks on Mr Wolfensohn and the bank. They give him credit for taking the lead in making the bank more responsive to the "civil society" they claim to represent. In fact, they agree it is ahead of most other multilateral organisations.

But they say the objective that has driven bank staff since almost its earliest days - to win approval for as many loans as possible - still dominates. And, they argue that after a promising start, Mr Wolfensohn has failed to make the most of his opportunity to change the bank's philosophy.

This is in part because many NGOs remain opposed to the bank's approach to the global economy, an approach that has been encouraged by its biggest shareholder, the US Treasury. The most prominent internal critic of this approach was chief economist Joseph Stiglitz, who has since left.

Mr Wolfensohn's desire that the bank should be taking more note of what the NGOs have to say has sometimes clashed with other objectives he has set his staff - for example, to take into account the wishes of borrowing governments and to be more "client focused".

Indeed, the bank has now to take into account so many constituencies - NGOs, borrowing governments, creditor governments and the financial markets from which it derives its funding - that it has become inevitable that the objectives will sometimes conflict.

The consequences of such conflicts have sometimes proved difficult for the bank and his president. The Financial Times reported last November on a case where bank staff, in an apparent attempt to serve the client and obey Mr Wolfensohn's orders to crack down on corruption, became closely identified with a politically driven investigation into alleged bribery in the construction of private power plants in Pakistan.

More attention, however, was focused on the controversy which surrounded the bank's proposal to lend China $40m to reduce poverty in the western province of Qinghai, a region with a significant Tibetan population.

Mr Wolfensohn backed the loan proposal, which would have resettled 60,000 poor farmers, even after a report from an independent inspection panel found the bank had violated seven out of 10 bank regulations in pursuing the project.

After a contentious board meeting in June this year, China withdrew its loan application in protest at what it saw as political conditions being attached to the loan, and announced it would finance the project on its own. The episode, it said, had been driven by pro- Tibet lobby groups in the US.

Some board members questioned whether, as one director put it, "the safeguard policy is incompatible with cost-effective poverty reduction".

Since China announced it would go ahead itself with the project, they noted it would now take place without any surveillance from the World Bank.

However, some saw the process as a vindication of the independent inspection panel, a body created under intense pressure in the early 1990s from the US Congress. Others, however, said that without the intense public furore over the issue, the breaches of bank regulations would have been largely ignored.

Some inferred from the controversy that the bank now has to take into account a broader set of risks when it makes loans than has traditionally been the case - including the risk to its reputation.

Pieter Stek, the Dutch executive director, said: "We are learning lessons about risk management. Financial risk was always dealt with well by the Bank. We have come to learn through sometimes bitter experience that there are other risks that have to be taken into account."